Your director's loan account can affect a mortgage application in two ways. If your company owes you money, some lenders may let you take it back out and use it towards your deposit, usually with a letter from your accountant. If you owe your company money, an overdrawn account may be treated as a debt in the affordability assessment, and money drawn from it is not normally counted as income.
Key takeaway: The direction of your director's loan account matters. Money the company owes you can be an asset for your deposit with the right lender. Money you owe the company can reduce what you may be able to borrow and brings tax consequences of its own. Knowing where the account stands before you apply avoids surprises.
[[stats: Up to 6.5x = Income with the right lender | 35.75% = s455 tax on overdrawn loans from April 2026 | 90+ = Lenders compared]]
What is a director's loan account?
A director's loan account, often shortened to DLA, is a running record of money moving between you and your company that is not salary, dividends or expense repayments. HMRC describes a director's loan as money you, or close family members, get from your company that is not one of those things or money you previously paid into the company.
The account can be in one of two states:
- In credit. You have put money into the company, for example to fund its start-up costs, and the company owes it back to you.
- Overdrawn. You have taken money out of the company that was not salary or dividends, and you owe it back to the company.
Can I use a director's loan for a mortgage deposit?
If your account is in credit, some lenders may accept the company repaying that money to you and you using it as your deposit. You are, in effect, getting your own money back. Lenders differ on this, as their own criteria show:
[[table: Lender | Director's loan repaid to you as a deposit | Conditions in its criteria ;; Nationwide | Accepted, keyed as savings | Accountant's letter confirming the amount is available to you and that there will be no detrimental effect on the business ;; Nottingham Building Society | Accepted | The loan must have come from your own resources, and the withdrawal must not affect the ongoing sustainability of your income ;; Family Building Society | Accepted | Repayment of money you personally put into the company ;; Furness Building Society | Not accepted | It may consider dividends taken from retained profit instead, with 100% shareholding, sufficient funds shown in the accounts and an accountant's confirmation]]
Criteria correct as at October 2026. Lender policies change regularly, and many lenders do not state a position at all, so their underwriters will look at each case.
What lenders generally will not accept is borrowing the deposit from your company, which would push your account overdrawn. Most lenders want the deposit to come from your own resources rather than a loan.
Can I use money from my business account for a deposit?
Possibly, depending on how it reaches you. Some lenders accept savings from your business with an accountant's letter. Nationwide, for example, asks the accountant to confirm the amount, that there are no conditions of repayment and that there will be no detrimental effect on the business. Halifax may ask for confirmation that withdrawing business funds will not negatively affect the business.
Money can come out of your company as a dividend, as repayment of a director's loan in credit, or as salary. Each has a different tax treatment, so the right route is a question for your accountant, ideally before the money moves.
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Does an overdrawn director's loan account affect a mortgage?
It can, in a few ways:
- It may count as a commitment. Barclays, under its profit after tax route for directors, captures a loan from the company that is still outstanding as a monthly commitment of one-twelfth of the outstanding amount, evidenced by an accountant's letter. A commitment reduces the amount you may be able to borrow.
- It is not income. Money drawn from your director's loan account is a loan, not earnings. NatWest states it will not accept income from directors' loans, and Precise Mortgages lists directors' loans as not acceptable for affordability.
- It can raise questions. An underwriter reviewing your accounts may want to know why money has been taken out, whether it will be repaid and how. A clear explanation from your accountant helps.
What are the tax rules on director's loans?
These are HMRC's rules rather than lenders', but they explain why an overdrawn account matters:
- Section 455 tax. If you owe the company money and it is not repaid within 9 months of the end of the company's accounting period, the company pays extra corporation tax on the outstanding amount. For loans made on or after 6 April 2026, the rate is 35.75%, up from 33.75%. The company can reclaim it once the loan is repaid.
- Loans over £10,000. If you owe the company more than £10,000 at any point, it is usually treated as a benefit in kind, which brings personal tax and National Insurance.
- Repaying and redrawing. HMRC has rules to stop loans being repaid just before the deadline and then taken out again shortly afterwards.
- Writing a loan off. If the company writes off what you owe, it is generally taxed as your income.
Your accountant can tell you exactly how these apply to you. The practical point for a mortgage is that how and when you clear an overdrawn account affects your accounts, your tax and potentially the lender's view.
Do I need to clear my director's loan account before applying?
Not generally. An overdrawn director's loan account does not usually need to be cleared before you apply for a mortgage. Some lenders may count an outstanding balance as a commitment in their affordability, so a mortgage broker at Quanstrom Financial can check how the lenders that suit your income treat it.
If your account is in credit and you plan to use it for your deposit, it helps to ask your accountant early for a letter confirming the balance, that it is available to you and that withdrawing it will not harm the business.
How is my income assessed as a director?
Your director's loan account is only one part of the picture. The bigger question is which income figure the lender uses: salary and dividends, or salary plus your share of company profit. That choice can change your borrowing far more than the loan account itself. These guides explain the detail:
- Mortgages for limited company directors, with lenders compared
- Low salary and high dividends, and how lenders treat dividends
- Pension contributions added back to company profit
If you are thinking of borrowing against your home to put money into your company, rather than the other way round, our remortgage guide and the director guide both cover capital raising for business purposes.
Speak to a mortgage broker in Eastbourne
Quanstrom Financial is a whole-of-market mortgage broker based in Eastbourne, helping directors in Hastings, Crowborough, Worthing and across Sussex, and throughout the UK by phone or video. A mortgage broker at Quanstrom Financial can look at your director's loan account alongside your accounts, and point you to lenders whose deposit and income rules fit, whether you are buying your first home, moving or remortgaging. Find out more about how Quanstrom Financial works as a mortgage broker for limited company directors.
Book a free consultation through the contact page to find out what you could borrow.
Frequently asked questions
Can I use my director's loan account for a mortgage deposit?
If the account is in credit, meaning the company owes you money, some lenders may accept it being repaid to you and used as a deposit, usually with an accountant's letter. Others do not accept it. Borrowing the deposit from your company, which makes the account overdrawn, is not generally acceptable.
Do mortgage lenders look at my director's loan account?
They can. Lenders reviewing company accounts may see the director's loan balance, and some ask about it directly. An overdrawn account may be treated as a commitment by some lenders and can prompt questions from an underwriter.
Does an overdrawn director's loan account affect a mortgage application?
It may. Some lenders treat an outstanding loan from the company as a monthly commitment, which reduces affordability. Money drawn from the account is also not treated as income. Clearing it before you apply is not generally necessary.
Is a director's loan counted as income for a mortgage?
No. A director's loan is money you owe back to the company, not earnings. Lenders including NatWest and Precise Mortgages say directors' loans are not acceptable as income. Lenders usually look at salary and dividends, or salary plus your share of company profit.
Can I take money out of my limited company for a house deposit?
Possibly. Some lenders accept business funds as a deposit with an accountant's confirmation that the withdrawal will not harm the business. How the money comes out, as dividends, salary or repayment of a director's loan in credit, has tax consequences, so speak to your accountant first.
Can my company lend me money to buy a house?
A company can lend to its director, but most lenders want your deposit to come from your own resources, not a loan. An overdrawn director's loan account also has tax consequences, including section 455 tax if it is not repaid within 9 months of the company's year end.
What is the section 455 tax rate in 2026?
For director's loans made on or after 6 April 2026, the section 455 rate is 35.75%, according to HMRC's Company Taxation Manual. It applies to the outstanding amount if the loan is not repaid within 9 months of the end of the accounting period, and can be reclaimed once the loan is repaid.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex, specialising in mortgages for limited company directors and self-employed business owners.
This article is general information only and does not constitute personal or tax advice. Tax rules on director's loans are set by HMRC and may change, so speak to your accountant about your own position. What you may be able to borrow depends on your individual circumstances and lender criteria.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home.
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