Mortgage for self employed ltd comp

The_tut

My husband and I run a company together - we pay most of our salary on a PAYE. I would like to move but am not sure what info I would need to provide - we as most SE people do keep income as low as possible. But I understand for a mortgage that does not always work.

We have a house worth about 215k with a 125k mortgage. we would like to be able to buy a house for 250k or more.

Does anyone know what I would need to provide and how it should be presented. We have been trading 8 years but the accounts don't show much profit - we use PAYE at minimum.

How many months or years would I need to show before I would get a mortgage or am I wasting my time in the current climate.?

thanks in advance if anyone can clarify this fo me.

happybroker

The key will be what profit they do show. Your paye and dividends will be used aling with any tax credits. If these don't add up to sufficient to evidence your ability to afford the mortgage then I'm afraid you won't be able to the required mortgage finance.

edit...minimum 1 years books, many like to see 3

BankCrusher

you will need to show at least £25k on paye to get £125k mortgage

around 5 x earnings

give one of yourselfs a payrise for 6 months to get to the amount you need to borrow pay the tax on it and after you get the deal give your self a paycut

only way you will get round this now the FSA banned celf certs

happybroker

BankCrusher wrote: »

you will need to show at least £25k on paye to get £125k mortgage

around 5 x earnings

give one of yourselfs a payrise for 6 months to get to the amount you need to borrow pay the tax on it and after you get the deal give your self a paycut

only way you will get round this now the FSA banned celf certs

Not so I'm afraid, the bank will treat you as self employed and want to see accounts.

The_tut

If for an example I pay myself via PAYE the required amount - would that be enough to get a new mortgage - even if the company makes no extra profit?

The_tut

I think what you are saying is that I am classified as self employed - no matter what I pay via PAYE. In which case they will want to see 3 years accounts with a profit + PAYE. Which must be enough to cover the mortgage in the normal way?

Is that right.

Thrugelmir

The_tut wrote: »

Does anyone know what I would need to provide and how it should be presented. We have been trading 8 years but the accounts don't show much profit - we use PAYE at minimum.

thanks in advance if anyone can clarify this fo me.

With Companies, profit is measured before the payment of corporation tax and dividends. By showing much "profit", I assume therefore you are refering to the retained profit left in the business. This isn't an issue.

What will matter, is the amount of salary drawn under PAYE plus the total dividends paid in every year. Hopefully over the 8 years you've been a Limited Company this will show an increasing trend.

happybroker

The_tut wrote: »

I think what you are saying is that I am classified as self employed - no matter what I pay via PAYE. In which case they will want to see 3 years accounts with a profit + PAYE. Which must be enough to cover the mortgage in the normal way?

Is that right.

In a nutshell this is correct yes.

Conrad

Your'e Accountant can legally adjust the profits to help you but of course there could be more Tax due. You need to be mindful that the lender may not like a sudden 'jump' in profits from the previous year though.

phlash

So even though the Limited company is a separate legal entity to the person applying for a mortgage, the mortgage companies still look into the company's profits and effectively treat the individual as self employed?

But they are not self employed - the Limited company employs them, the fact they are shareholders is surely irrelevant?