It is commonplace for directors of limited companies to pay themselves a salary that is below the next tax threshold, retain more profit in their businesses and pay themselves a large dividend. Tax on dividends is lower than on income, so it makes sense for directors to do so, to maximise their income levels.
However, many high street banks will only consider the applicant’s personal salary income, which can be significantly lower than their real take-home amount. This, therefore, limits the amount the bank is willing to lend you for a mortgage, despite being the director of a (hopefully) profitable business.
There are options though so do not worry. It is just advisable for you to find a lender who specialises in self employed mortgages for company directors looking to make their property purchase. These specialist lenders will consider your circumstances and your dividend payments as well as all other criteria that self-employed directors need to meet. That is where Active come in, because we work with these types of lenders every day. We have a dedicated specialised team that liaise with the types of lenders who see the bigger picture and take into account your dividend and bonus payments rather than just your monthly salaried income. You are in safe hands with Active, we can do the hard work for you so you can focus on running that business.