Best director mortgage deals

What is a director mortgage?

Mortgages for company directors aren’t always straightforward, as it can be harder for lenders to determine how much you can afford to borrow. The application process for a director mortgage and the range of deals available should be the same as for any other type of mortgage. However, depending on your circumstances, it can be more difficult to get a mortgage if you’re a company director.

A director mortgage is designed for people who run their own limited company. Instead of just looking at your salary, lenders can take your dividends or share of company profits into account.

Some specialist lenders will even base your mortgage on the company’s net profit, not just what you’ve taken out personally. That can make a big difference to how much you can borrow.

These types of mortgages aren’t a separate product, they’re just assessed in a way that’s better suited to your situation.

Why choose a director mortgage?

Director mortgages can help if:

• You take a low salary and rely on dividends
• You retain profit in the business rather than draw it
• You’re newly incorporated and don’t have years of accounts yet

With the right lender, you could:

• Borrow based on salary and dividends combined
• Use retained profits to boost your borrowing power
• Access competitive interest rates from both high street and specialist lenders

Some lenders will only need one year of accounts, which can be a big help if your business is fairly new.

If your company has made a loss, it doesn’t mean you can’t get a mortgage, but it might act as a red flag for lenders when looking for evidence that you will be able to afford your monthly repayments. A mortgage broker like L&C can help you to find the lenders that are most likely to offer you a mortgage, based on your own situation.

How director mortgages work

Most lenders will want to see at least one or two years of trading history. If you’ve got a good accountant and clean credit history, you’ve already ticked two of the main boxes.

Depending on the lender, they might base your income on:

• Salary + dividends
• Net profit before tax
• Retained profits held in your business

This gives you more flexibility in how you structure your income, without affecting your mortgage application.

Who can get a director mortgage?

To apply, you’ll usually need to own at least 10% of the company for it to be classed as a director mortgage. Lenders will also want to see:

• At least 1–2 years of company accounts
• SA302s and tax year overviews from HMRC
• Business bank statements
• Proof of ID and address
• A good credit record

Most lenders in the UK will only take your income and dividends into account, and won’t consider any profit that remains in the company. However, some lenders will use profit when assessing your affordability, so it’s important to check with a mortgage broker what criteria will be used.

If you’re a contractor working through your limited company, you might be better off with a contractor mortgage, we can help with those too.

Newly formed companies

If your business has only been running for a short time, you might still be able to get a mortgage. Some lenders will consider applications with just one full year of trading, or even less if you have strong evidence of regular income and contracts.

How to find the best director mortgage deals

Not all lenders are comfortable working with company directors - but plenty are, and we know who they are.

We compare mortgages from across the market to find a deal that suits your income structure and long-term goals. Whether you want a fixed rate, tracker, or interest-only deal, we can walk you through your options.

Once we’ve found the right deal, we’ll support you throughout the process and deal with the lender on your behalf.

Making repayments on a director mortgage

Repayment of a director mortgage works in the same way as any other type of mortgage. If you have a fixed rate deal, you’ll pay the same amount every month for the duration of your term, whether that’s 2, 5 or 10 years. This may offer some stability and peace of mind for company directors on a budget.

Alternatively, if you have taken out a variable rate mortgage, your repayments could change over the course of your mortgage term, depending on interest rates.

If you want to make overpayments or need the flexibility to borrow back previous overpayments, for example if you have a seasonal business, then be sure to choose a mortgage provider that allows for this without any penalties.