Self Certify Mortgage Advice

snufes

Hi

Myself and my partner are 'employed' by my partner's company which has been trading since July 03.
From the company we get £500 per month PAYE each and a dividend payment of £2000 per month = total income £3000 per month.

We have no debts and savings of about 17K.

We are currently on an SVR of 4.5%, we pay £1100 per month which includes a £100 overpayment. I am looking to remortgage for 22 years £170K, current house value £220K.

Has anyone got any advice on where we could go? We have stuck with the same mortgage company because of the 'self certify' thing but now we are on SVR I know it will keep increasing.

Many thanks

_Andy_

Why do you feel a self-certified mortgage is needed? I assume that you have plenty of accounts given you've been trading so long.

snufes

Hi Andy

Our accounts do show a profit but only of about 8K this year (due to recession) do you think that matters?

Thanks for your reply.

herbiesjp

As long as you have proof of that incoem, there is no need to self certify.

A mainstream lender should be able to help

Mrs_Bumble

As above, you say that you are PAYE and have dividends, you have got payslips, P60 and your accountants will confirm the dividends? No need to self certify, which is a good job because they are virtually non existent.

Although looking at the figures, is £3000 a month between you? or each?
Do you have any other credit committments?

If that income is between you then it won't support that level of borrowing. This doesn't mean that you can resort to a self cert either though as the income has to be there to support the application.

LizEstelle

herbiesjp wrote: »

As long as you have proof of that incoem, there is no need to self certify.

A mainstream lender should be able to help

And what would constitute 'proof' in this situation, where someone's company is 'employing themself' then..? I assume that a letterheaded statement of 'salary' would be worthless...

herbiesjp

Accounts would be helpful

opinions4u

snufes wrote: »

Our accounts do show a profit but only of about 8K this year (due to recession) do you think that matters?

With the greatest respect, your accounts are your proof of income. That applies to the taxman and it applies to most mortgage lenders.

This, combined with your first post, suggests that although you are perfectly aware that your profit is only £8k you want to declare a higher figure as your true income without wishing to verify it in order to obtain mortgage finance.

A lender may take a look at your accounts and make allowances for payments that you have made to yourselves before the net profit has been declared, but if your business has not been generating the necessary income to fund a mortgage why do you feel that a lender should advance you funds based on a higher amount?

Yes. It matters.

LizEstelle wrote: »

And what would constitute 'proof' in this situation, where someone's company is 'employing themself' then..? I assume that a letterheaded statement of 'salary' would be worthless...

Business accounts signed off by a chartered or certified accountant. Ideally specifically clarifying any payments made to the owners of the business before the net profit figure has been declared.

It is very easy to clarify:

Net profit - £8k
Dividends Paid to Owners - £24k
Salary Paid to Owners - £12k

Net Profit prior to payments to Owners - £44k.

Game on.

Reucing the LTV to 75% (£5k debt reduction) would get you a better rate though.

[Deleted User]

Mmm...I'm confused by your original post: can I double-check something?

Are you suggesting (and others haven't picked up on this yet) that THIS YEAR you have 8k of distributable profits from which your dividends will be taken?

Or are you saying that after you have distributed dividends to yourself and your partner, 8k is left?

The terminology of your original post was confusing. You pay dividends out of net profits, but it's not clear whether your net profits were only 8k this year (and so, the ulterior motive of your post - not that there's anything wrong with this - is that you want to apply for a mortgage but this year your income is lower than usual, right?)

[Deleted User]

opinions4u wrote: »

It is very easy to clarify:

Net profit - £8k
Dividends Paid to Owners - £24k
Salary Paid to Owners - £12k

Net Profit prior to payments to Owners - £44k.

Correct me if I'm wrong, but the salary paid to owners is coming out pre-gross profit (e.g. it's a personnel cost, like any other member of staff - it's a cost of running the business and needs to be deducted to work out profit) and so:

Net profit prior to divident payments to Owners = £32k

What I'm confused about - and just want to check with the OP - is whether this statement is accurate or whether the real situation is that actually this year they only have £8k of profits, so haven't been able to divvy themselves as much as they normally would.

Not suggesting this is the case, but wanted to check!