Mortgage for Company Director on PAYE
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Mortgage for Company Director on PAYE
Archie Thomas explains how the mortgage process works for company directors on PAYE.
Can you explain what a company director on PAYE is? Is it harder to get a mortgage as a company director on PAYE?
A company director on PAYE is someone that holds a directorial position in a company, and they’re paid through Pay As You Earn, which is the HMRC’s method for collecting income tax and national insurance for employees.
Generally if you’re on PAYE as a company director, the lenders only take the PAYE income into account if your shareholding is 25% or less. If that’s the case, they’d use your payslips to assess your income. If you hold more than 25%, we look at your SA302s and tax year overviews.
I wouldn’t say it’s more difficult if you’re on PAYE. We’ll ascertain the figure we’re working with from your income, and then we look at your affordability. As long as we can get the correct documents to the lenders, it should be fairly straightforward.
Can I still get a mortgage if I’m a company director on PAYE and only have one year’s accounts?
If you do have that over 25% shareholding, we need the accounts. Generally, lenders will look for two years’ records, but other lenders will let you through with one year of accounts.
It’s always changing, but as of today in June 2025, Halifax is one lender that allows one year of business accounts.
If you’re earning PAYE income and you’re under the 25% shareholding, we can just look at your payslips. Generally, that’s with the latest three months’ payslips where we take an average.
What is the difference between PAYE and LTD? Does this affect the mortgage process?
It doesn’t massively affect the process. The main difference is your employment status and taxation. With PAYE, you’re an employee, and your income tax and national insurance will be deducted at source.
If you’re a limited company director, you’ll be classed as self-employed or a business owner, and you will pay corporation tax on your profits and personal income tax on your salary and dividends.
How will lenders assess my income as a company director on PAYE? How is affordability calculated?
If you’re a limited company director and you have over a 25% shareholding, it’s usually your latest two years’ account, your SA302s and your tax year overviews. Some lenders will take one year if that’s all you’ve got.
It varies depending on the lender. Some will go off salary and dividends, while others will take into account business profits and dividends.
What documents do I need to prepare?
For PAYE under that 25% shareholding, you’ll be looking at your three most recent payslips and three latest bank statements. The bank statements need to show the income from your payslips.
It’s currently June, so if you were applying now you would need payslips for March, April and May, with bank statements showing those salary credits going in.
If you are doing a purchase rather than a remortgage, the lender will ask for proof of your deposit as well, whether that’s a gift or savings. Generally, that also requires a three-month history in your bank account, so they can see where it’s come from.
If you have a 25% shareholding or more, they will want your latest two years’ SA302s and supporting tax year overviews. You’ll need those three months’ bank statements as well. Sometimes they take your full company accounts and go off company profits, but only with certain lenders.
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What if my payslips are not considered as PAYE income?
If your payslips aren’t considered as PAYE income, it usually means you’re a significant shareholder. You’ll own over that 25% mark, in which case lenders just look at your SA302s and tax year overviews, to assess the overall profits for the business.
Can I get a mortgage as a company director on PAYE if my accountant is working to maximise profit in my business for tax purposes?
That’s where we might focus on the lenders that would look at your full business accounts. We look at the profit your business has made over the last year and the previous accounts. We can go off full business profits rather than what you are actually taking out of the company.
How much can I borrow and what deposit will I need as a company director on PAYE?
I can’t give you a definitive answer, because all lenders differ in how they calculate the affordability.For a company director, the lender will either use your salary and profits or your salary and dividends. Once we arrive at that income figure, most lenders take an average over the last two years. From there, we work out the affordability with that lender to see how much you can borrow.
For PAYE, we generally just use an average of your latest three months’ payslips. If you have overtime and commission, lenders average those separately. Some lenders won’t use the full 100% of your commission and just use 50%. Again, that depends on the lender.
With the deposit, that’s related to the Loan to Value, which is the size of your loan compared to the value of your deposit. That’s not influenced by whether you’re an employee or a director.
Most lenders have deposit options from 10%, and some will allow a 5% deposit. The more deposit you’ve got, generally the cheaper your payments are going to be.
Can I get a Buy to Let mortgage as a company director on PAYE?
There are some slight differences in the process. Generally with a Buy to Let, lenders won’t take your income into account. It’s all completed on the expected rental value.
That’s also where taxation comes in. If you’re a basic rate taxpayer, the rental usually needs to be 125% more than your mortgage payment per month. For a higher rate taxpayer, it usually needs to be about 145% of the mortgage payments.
How does bad credit affect me getting a mortgage as a company director on PAYE?
Poor credit affects everyone. Whether you’re a company director on PAYE or an employee, it’s going to affect you. Poor credit generally reduces the number of lenders available, and also tends to result in a drop of affordability.
If you think you could borrow £250,000, but the lender sees poor credit on your file, they may only let you have £200,000. That’s not influenced by whether you’re a director using your accounts or if you’re an employee using PAYE. It’s the same across the board.
How does remortgaging work as a company director on PAYE?
There aren’t many differences with a remortgage. It’s the same as if you’re employed. Generally you should start thinking about a remortgage about six months prior to your current fixed rate ending, to give yourself enough time for the new mortgage to complete.
If you do cut it a bit fine, some solicitors don’t work that fast and it could mean you move on to the lender’s Standard Variable Rate. That rate is a lot pricier than you’d be currently paying on your fixed rate.
What else do we need to know about mortgages for a company director on PAYE?
Mortgage brokers look into the market to see everything that’s on offer for you. We’re going to save you a lot of time and stress. Looking into this yourself can be a bit tedious, and we can do all that for you to recommend the most suitable deals for your situation.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
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