Mortgages for Company Directors

Mortgages for Company Directors

A mortgage is a loan which is secured against your home. When you take out a mortgage, you enter into an agreement to pay the loan back, with interest, over a period of time agreed with your lender. If you are not traditionally employed – for example, if you are the director of a company – it can sometimes be difficult to prove your overall income to a prospective mortgage lender.

Looking for a mortgage as a company director can be something of a mixed blessing – in the one hand, you may well have more capital than the average buyer at your disposal, but on the other hand, you may receive your money erratically, via dividends, which can prove a problem when asked to demonstrate your income. Some director reimbursement strategies are structured around a lower standard salary which is topped up with high dividends and stakes in the company. Additionally, because company directors may not receive a steady monthly income in the manner of traditionally employed people, some mortgage lenders can be wary of lending to this market.

How are mortgages for company directors assessed?

Mortgage applications for company directors are assessed differently from traditional mortgage applications. A normal mortgage application will be assessed on the basis of your salary – a company director mortgage application however, takes into account other factors such as your stake in the company and the dividends you receive. A mortgage lender will assess a contractor mortgage application on a case by case basis, using a combination of factors which might include:

• Your base salary
• The shares that you have in the company
• The past performance of the company
• Your average income from dividends over a set period of time

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