Many people assume that getting mortgages for directors is always easy, but there is a little struggle. One reason is that most lenders always view people who are self-employed as high-risk borrowers. This is why the way they assess mortgages vary, especially when it comes to director mortgages. In fact, being an employee can typically be an easier way of getting a mortgage compared to a company director. Lenders usually won’t consider a director mortgage until you have been trading for at least 1 year.
If you want to learn more about director mortgages, here are four questions to help you.
Can a Director with a Bad Credit Get a Mortgage?
The answer is, Yes. A company director with a bad credit score may be limited by the number of lenders. This limitation will be based on how recent and severe the issue is. However, it is possible to get a mortgage even with a bad credit score. The lenders will also be limited based on other needs like wanting to use the company’s figures. In short, a company director can get a mortgage even with a bad credit score. However, the number of available lenders is limited based on how severe the case is.
If a Director Changes Their Style of Trading, Can They Still Get Mortgage?
If you change your trading style, it usually means you need another year of trading before a lender will consider your application. Most lenders will consider it as a new business, and you will need to wait for some time, sometimes even three years to stabilise your accounts. You will need to do this even if you have been using the previous trading style for more than 10 years. Therefore, for a director to get a mortgage after changing their trading style, the business has to wait 1-3 years before the business establishes its affordability and income.
Can the Director Borrow Based on the Company’s Recent Figures?
Company directors can borrow mortgages based on the business’ recent figures. However, this is not possible for companies that are making higher profits in the previous year than in the past years. Normally, lenders consider the progress of the company for the past two or three years to determine affordability. Lenders can consider the average of the past three years to determine the amount of mortgage a company director is eligible for. It is, therefore, crucial to inquire what the lenders consider when giving mortgages based on the business’s income.
Can the Director Get Mortgage if the Business Has Been Through Loss for More Than 3 Years?
Getting a mortgage for company directors whose businesses have been experiencing loss for the past three years is difficult. The loss will show that the company lacks income reliability and, therefore, is a high-risk borrower. So, if a company has recently experienced losses, it may be hard to get a mortgage. However, if it made a loss and made efforts to recover it, there is a chance of getting the loan.
The Take a ways!
These are the things involved in director mortgages. From the details, it is clear that a company director can get a mortgage based on the business’s income for the past three years. It is always advisable to make inquiries to know your eigibility.
