Securing a mortgage can seem daunting if you’re a Company Director on PAYE. But with a bit of preparation, it’s very achievable. When your time is split between running a company and managing a household, getting the right help early on is crucial.
Step 1: Assemble Your Team
Engage a seasoned Mortgage Broker and loop in your accountant from the get-go. This winning combo will streamline the process, ensuring you have all the paperwork to support your mortgage application. Plus, your broker will act as your advocate, dealing with lenders, completing your application, and submitting it on your behalf—all while you stay focused on your business.
Step 2: Avoid Pitfalls
Going alone might seem tempting, but a rejected mortgage application can dent your credit score. Spare yourself the hassle—immediately consult your accountant and a reputable mortgage broker.
Can I Get a Mortgage as a PAYE Company Director?
Yes, you absolutely can! Many lenders cater specifically to Self-Employed individuals, including Company Directors on PAYE. However, these lenders are only sometimes on the high street; they often pre-qualify applicants through Mortgage Brokers. So, find an adviser experienced in helping Self-Employed clients. Ensure your broker is authorised and regulated by the Financial Conduct Authority (FCA) and has a registered office in England.
How to Document Your Trading History
Lenders aren’t trying to make life hard for Company Directors; they need to ensure you can afford the mortgage now and in the future. Typically, you’ll need at least one year of trading history, supported by your latest accounts showing income, expenses, net profit, and the salary and dividends you’ve paid yourself. This will determine how much you can borrow.
Pro Tip: Get your accountant involved early to prepare the necessary documentation.
Essential Documents Checklist
Here’s what you and your accountant should have ready when discussing mortgage options:
- Limited company accounts (up to the last three years, if available)
- Payslips showing your PAYE income for the past 12 months
- Proof of dividends
- Business and personal bank statements (past three months)
- A copy of your credit report
Assessing Your Income
Lenders will want to see all sources of your income, including PAYE salary, dividends, and any other income streams like buy-to-let properties. If you’re applying for a joint mortgage, your partner’s income will be considered, too.
- PAYE Salary: As a Company Director, you likely pay yourself a modest salary, up to the £12,570 pre-tax allowance.
- Dividends: You may also draw dividends from your profits. The more you earn, the more you can borrow. Lenders will review your end-of-year accounts, including your tax overview and calculations from HMRC.
- Retained Profit: Some lenders consider retained profit (undistributed earnings) as an indicator of a stable business. They may even assess your income based on salary + net profit, instead of salary + dividends. If this benefits you, let your mortgage adviser know.
Handling Fluctuating Income
If your income varies throughout the year, inform your Mortgage Adviser. They can present your case to lenders, explaining any peaks and troughs. It’s their job to create a complete and reassuring picture for the lender.
How Much Deposit Will You Need?
Aim for one of the standard deposit bands: 10%, 25%, or 40%. Higher deposits typically unlock better interest rates and terms. However, some lenders now offer 5% deposit mortgages, especially under the Government’s Mortgage Guarantee Scheme. You could qualify if your credit record is good and you’re buying a residential property under £600,000.
How The Mortgage Blog Can Assist
At The Mortgage Blog, we understand the pressures of running a company and a household. You work long hours and need a mortgage process that’s as smooth and efficient as possible. That’s where we come in. We specialise in helping time-pressed Company Directors like you secure the right mortgage. We’ll help compile the necessary documents, approach lenders, and manage the entire process for you.
Here’s how we help:
- Connect you with specialist lenders familiar with Company Directors
- Secure a mortgage tailored to your needs
- Handle and submit your application
- Communicate with lenders to ensure a smooth process
- Keep you informed every step of the way
- Offer advice on protection and insurance
Get Help on Your Homebuying Journey
Buying a home can be full of twists and turns. The Mortgage Blog is here for you if you want support. We’ll find the best mortgage deal for you, liaising with all the relevant parties and smoothing out bumps in the road. We’re with you every step of the way, providing the support and guidance you need to navigate the homebuying process confidently.
Reach out to our experienced mortgage advisers, and we’ll give an overview of available options while delving into the best-suited solution for you. Call us on 0333 335 6595 or message us to get started!
