The time has come to move on, and you’re excited to start your next chapter in your new home!
However, as a company director, you will need to get a few things in order to secure a mortgage with competitive rates and terms. Navigating the mortgage market as the owner of a limited company can be a minefield – but luckily, the team here at CLS Money are on hand to guide you through the process and point you in the direction of the mortgage lenders that are more likely to take a healthy view on your position.
Things to consider when moving between properties
A home mover is someone who already has a mortgaged or owned home and is moving into a new property. As a home mover, you can choose to ‘port’ your mortgage with your existing mortgage lender or apply for one with a different provider. A mortgage broker will be able to advise you on the best option based on your repayment history and the terms of your current agreement.
As a home mover, you are likely to have some general knowledge when it comes to finding the right mortgage and dealing with brokers. Whilst costs are important to you, you’re focusing on other factors for your move, such as achieving new lifestyle goals, upsizing to meet the demands of your growing family, or changing location due to work or family commitments.
You’re in a much stronger position than a first-time buyer because you have evidence of your ability to pay your mortgage repayments in full and on time every month. This will put you in a favourable position when it comes to getting a good interest rate. You’re also likely to have built up some equity in your existing property, meaning you’ll be entering into a new agreement with a better loan-to-value (LTV) than before.
One of the most common problems that home movers experience is being stuck in a chain. This is the term used for a sequence of linked home purchases who are reliant on each other for the preceding and succeeding purchases; for example, those buying your house are reliant on you completing on your new home in order to move into your old one.
It’s important to stay in contact with your solicitor throughout the moving process to ensure everyone is kept up to date with potential move dates and any delays are communicated up and down the chain.
How will being a company director affect your chances of getting a mortgage?
If you run your own limited company, it can make it more difficult to be accepted when looking for a mortgage. This is because the mortgage industry isn’t built for the self-employed market. Many lenders do not accommodate the often-unique financial situations of today’s company directors and may view you as ‘high risk’ due to your complicated or unusual income structures. Others will not take retained profits into consideration, which is a problem if you are legally minimising your earnings to keep your tax bills as low as possible.
Whilst it can be trickier to be accepted for a mortgage as a company director, it is by no means impossible. There are lenders out there who offer products that have been specifically designed for people who own and run limited companies.
As a general rule, lenders will expect you to have been trading for a year prior to your application. You will need to supply your preferred mortgage provider with at least one full years’ tax return. Some lenders may ask for tax returns from the last two or three years so they can better understand your income structure and better judge your ability to repay the amount you’re looking to borrow. If you have suffered recent losses within your business, remember that this may affect your eligibility, too.
As you can see, your company directors pay isn't the most accurate way to predict your worth and annual income. To acheive a competitive mortgage deal there's probably more information on your business bank statements and personal bank statements when discussing self employed mortgages. High street lenders would typically judge you solely on your annual income whereas when you choose specialist lenders for a mortgage application they investigate your situation far more thoroughly. When you take that into consideration, limited company directors are almost always better off speaking to an expert who can introduce them to the specialist lenders ready to offer them the best interest rates.
If you’re a company director looking for a mortgage for a new property, we strongly advise working with a broker who understands the challenges you’re facing when it comes to finding a competitive mortgage deal.
Why use a mortgage broker?
There’s really no substitute for bringing a specialist mortgage advisor on board. Even if you’ve managed to get a mortgage on a previous property during your time as a company director, lenders’ criteria are always changing, and you need to make sure you’re approaching the right companies for the best chance of being accepted.
Our mortgage brokers have plenty of experience in helping limited company owners source the right deal. We work with the whole of the market, which means we’re not restricted to a pool of companies, and we have great connections with many niche lenders who specialise in supporting self-employed individuals. Add to that our exceptional customer service and our flexible appointment times, and you’ll find us a real joy to work with!
CLS Money help borrowers in need of every type of mortgage
We offer the type of specialist mortgage advice that places limited company director mortgages week after week whatever their trading history. But that's not all; we're also here for every type of sole trader or business professional looking for independent mortgage advice and their best selection of possible mortgage providers.
We provide the mortgage products most lenders aren't positioned to work with, looking deeper into unique situations to help borrowers achieve the lending criteria required of them.
So, if you're a company director, looking for tailored advice to lower your monthly mortgage payments or achieve a better deal on a bigger loan amount, you know how to call.