Mortgages For LTD Company Directors | SA302’s or Company Account Route?

Gemma: This week’s video is all about company directors and getting a mortgage. Hello and welcome back to our channel and podcast! My name’s Gemma, and here at WIS we talk about all things relating to money, mortgages, and positive money mindset.

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On today’s episode of Let’s Talk Money and Mortgages, we have Iftika (Ifthi) joining us. For those who don’t know, Ifthi is a trained accountant and mortgage advisor who has been in the industry for over 11 years.

Welcome back, Ifthi! How are you today?

Ifthi: I’m very well, thank you. How are you doing tonight?

Gemma: I’m doing well, thank you!

Q1: How much of a shareholder do you have to be to be a company director, and how does that affect your mortgage?

Ifthi: A company director is someone who runs a company — usually a limited liability company.

Let’s say there are 100 shares in the company. In small or “closed” companies, there are often one to three shareholders.

The ideal scenario for a mortgage is when the applicant (individual or joint) owns 100% of the shares. This gives you the most flexibility because the bank can assess your entire income.

However, if you share the company with others — say, with your spouse or a business partner — your share of income is limited to your ownership percentage.

Q2: Why does having a shared ownership limit mortgage options?

Ifthi: Let’s say I own 50% of a company with my friend. He is responsible for half the income and expenses, and I’m responsible for the other half.

Banks worry that if my business partner leaves, the company’s turnover might drop — for example, if he takes his clients with him.

Because of that, most banks will only consider your share of the income (e.g., 50%) when assessing your mortgage.

However, some lenders are more flexible, but generally, you won’t get a mortgage based on the full company turnover.

Q3: What’s the difference between SA302 forms and company accounts?

Ifthi: The SA302 is personal — it’s your individual tax summary showing salary and dividends. It comes from your tax return (SA100), which you submit to HMRC.

Company accounts, on the other hand, show how well your business has performed — its turnover, profit, and expenses — not your personal income.

Banks generally prefer SA302s because they reflect your actual personal income.

However, some lenders also consider company accounts, especially if you own 100% of the company.

Q4: When is it more beneficial to use company accounts instead of SA302s?

Ifthi: Sometimes, company directors don’t draw all their profits as salary or dividends — they retain earnings for reinvestment.

In such cases, company accounts might show a stronger financial position than SA302s.

There are also specialist lenders who consider company accounts or a combination of both.

This can help people whose tax planning means their personal income appears low even though the business is doing well.

Q5: What if the company has had a recent loss?

Ifthi: Banks generally don’t like losses. If your company has recorded a loss, getting a mortgage can be very difficult, though not impossible.

You should speak to an advisor — they might be able to find a specialist lender or explain the loss (for example, a one-off event) to the bank.

Q6: What if profit has dropped but not a loss?

Ifthi: If your income has decreased, banks often average your last two years.

For example, if you earned £50k one year and £100k the next, they might take an average of £75k.

However, if your income is going down, they usually take the lower figure, fearing a downward trend.

In such cases, they might ask for an accountant’s letter or recent bank statements to confirm current performance.

Q7: What if a company reinvests profits or has exceptional expenses?

Ifthi: If a company invests in something like a new website, it can reduce profits temporarily.

If that expense is a one-off, a common-sense lender may overlook it — especially with a letter of explanation from your accountant.

Another example is pension contributions.

Many directors pay up to £40,000 into a pension at year-end, which reduces profit on paper.

Some lenders will still consider this as part of income if you explain it properly.

Q8: Are there additional documents company directors need to provide?

Ifthi: Yes, typically lenders require:

• SA302s and Tax Year Overviews
• Company accounts
• Personal and business bank statements
• ID and address verification
• Sometimes they may ask for an accountant’s letter to explain unusual financials.

Q9: Can company directors still get 90% or 95% mortgages?

Ifthi: In theory, yes.

However, after COVID-19, many lenders became more cautious and restricted 95% mortgages to employed applicants only.

So, while it’s not impossible, your options may be limited.

Q10: How do lenders view years affected by COVID-19?

Ifthi: COVID-19 still affects lending decisions.

If one of your financial years was poor due to the pandemic, lenders may average your last two years — which can reduce affordability.

However, some lenders with common-sense underwriting will consider just your latest year if you can explain that the previous year was affected by COVID.

Q11: Can I just pay myself extra dividends now to boost my income?

Ifthi: A common question — but usually, no, it won’t help.

Lenders rely on filed SA302s or finalised company accounts.

If you take dividends now, they won’t appear on your last filed return or accounts — so they won’t count.

If your financial year is about to end, you might include them in the next accounts, but you should check with your accountant first.

Also, remember dividends are taxable, so doing this just before applying may backfire.

Q12: Any final advice for company directors applying for a mortgage?

Ifthi: Self-employed and company director mortgages are always trickier than for employed applicants.

Since banks can’t easily verify income through payslips, it’s best to seek advice early.

If SA302s don’t work, there may be other routes — such as using company accounts or contract income — but not all lenders allow this.

An independent broker can guide you toward lenders that best suit your situation.

Conclusion

Gemma: Thanks again, Ifthi, for sharing such valuable advice!

A reminder that these points may or may not apply to everyone.

Please check with an advisor or broker to ensure they’re suitable for your circumstances.

If you don’t have one, we’ll leave our WIS contact details below — we’re always happy to help.

⚠️ Remember: A mortgage is secured against your home or property and may be repossessed if you do not keep up with repayments.

Thank you for joining us — we’ll be back next week with another episode of Let’s Talk Money and Mortgages.

Have a great day, stay safe, and see you soon!