Can Director's Loan repayments count as income for mortgage?

emv

I have a small limited company whch I draw a small salary from. Any additional money I currently take as Director's Loan repayments as I have lent a reasonable sum of money to the comapny. But I need to get a new mortgage later this year & I wonder whether the mortgage company will only take into account my salary or would consider the director's loan repayments as well. Can anyone help?

Vix

Thrugelmir

The key is the profitably of the business. As you control the Company the amount you withdraw is totally at your discretion. Whether the business can afford it is another matter.

emv

Thanks for your replies - the question was only about whether this would count as income for mortgage purposes rather than affordability for the business as I'd only take out the money that's available to be taken out! My alternative is to stop taking loan repayments & pay myself a higher salary but as this has income tax implications, i wanted to see whether this had distinct beenfits as far as mortgage lenders are concerned to offset the tax....

Thrugelmir

emv wrote: »

Thanks for your replies - the question was only about whether this would count as income for mortgage purposes rather than affordability for the business as I'd only take out the money that's available to be taken out!

I think you are missing my point. Are you the sole shareholder of the Limited Company?

emv

No, I'm not the sole shareholder & sorry if I missed the point.

Annisele

emv wrote: »

No, I'm not the sole shareholder & sorry if I missed the point.

In that case, what percentage of the shares do you own? And do you have any protection against your shareholding being diluted (ie can the directors issue a whole bundle of new shares to somebody else, this reducing the percentage you have)? Lenders take a very different view if you own 100% of the shares to if you own 25% or 0.5%.

As others have said, the problem is that return of capital is simply not income. For example, if we agreed that you'd lend me £1,000 today, and I'd pay you back at £100 per month for 12 months, then you'd end up with income of £200 out of the deal.

emv

I own 66% & my husband owns 34% - no chance of any other shares being issued & the mortgage would be a joint one. Looks like I'll need to leave the Director's Loan as is for a while & take the salary instead then...