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Company Director Mortgage Guide 2021

Owning a property in the United Kingdom is a great means of investment and takes a long time to complete this process. Most of them opt for a mortgage loan, a popular method of arranging sufficient finances that are preferred by people investing in a home. There are many mortgage types available for buyers- fixed-rate, buy-to-let, discount, joint, offset mortgages and more, that is differentiated by the interest rates and deposit amounts. The flexibility of mortgages has opened doors to more buyers from the UK and beyond. There are many mortgage brokers London available across different neighbourhoods of the capital who offer exclusive deals for first time buyers, company directors, entrepreneurs and more. 

Limited company directors are the owners or partners of a company who hold a percentage of share or equity. When it comes to availing mortgage loans by limited company directors, there are some complications involved during the initial stage of the loan application. Many LTD directors think that they cannot apply for a mortgage with the towering requirements and rules, which is wrong. Unlike other types of mortgages, there are additional conditions for company director mortgages.

ELIGIBILITY CRITERIA

For company directors to get qualified for a mortgage, they should have been trading for a while and hold proof for the same. Most mortgage lenders expect them to have been in the business from 12 months to two years or more. Being a company director, the income proofs of the past 2 years are to be submitted to the lender to move further. To avoid additional delays, the assistance of financial advisors is crucial to decide what percentage of profits has to be assigned for the director’s income profile and other finances. When functioning as a director, they are recommended to take a stipulated amount as monthly income that is considered by the mortgage lenders.

INITIAL DEPOSITS

When applying for a mortgage, buyers are subjected to pay a small percentage of the property’s total costs as an initial deposit for the mortgage loan to get approved. For other mortgages, people pay about 5% to 10% in advance to proceed with the loan. While company director mortgages fall under the self-employed category. Considering the risk factors involved in providing mortgage loans for an entrepreneur or a self-employed individual, the deposit amount is higher compared to the usual mortgage types. Only specialist lenders provide this type of mortgage and directors are expected to pay as much as 15% deposit amount followed by other procedures.   

  

SOURCE OF INCOME

Lenders providing mortgage loans have their own method of calculating the income of a self-employed individual. When it comes to company director mortgages, the type of director is determined before assigning the right type of loan for them. The income range differs from a sole trader, partner or director of a limited company. Net profits and percentage of shares in the company play a vital role in deciding the mortgage loan. For a company director, if the shares are less than 25%, they are considered a normal employee and are not eligible to apply for this type of mortgage. If the buyer meets all the necessary requirements for the mortgage, the lender might grant the loan with up to 95% LTV. The bank account statements of the recent three months before submitting the application for a mortgage is crucial. In addition to this, the company statements of the last three years are required for the lenders to verify the financial readiness of the buyer. The credit scores of the buyer should be low and maintained consistently to avoid the application from getting rejected.

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