Limited Company-Mortgage Criteria

Judged1

Hi,

I am the sole director of a limited company and pay myself a small salary and the occasional dividend. My question is; Do most providers take in to account Profit and Loss, Salary or Dividends when calculating how much they will lend? I am trying to balance this out before the tax year end.

Thanks for your help.

kingstreet

Chances are they will ask for copies of the Company's accounts, as they would if you were self-employed.

From Halifax criteria;-

For Limited companies we use the combined figures of dividends plus drawn salary and if income verification required these must be confirmed by the accountant. If accounts received do not clearly confirm income we will require SA302s or accountants reference

Crashandburn

Most just do salary and dividends.

As you are the sole director, there are some that will use the net profit meaning you don't have to take it all out now

herbiesjp

Indeed different lenders look at different things.

In the main Net profit/retained profit, salary, and dividends are what lenders look at.

WellKnownSid

We had to supply a couple of years accounts with a covering letter from our accountant. I think as long as you aren't paying yourself via dubious companies in the Cayman islands, then normal salary-dividend practices for limited companies are fine.

Judged1

Cheers, thanks for all your help.

Conrad

Low rate prime lenders need 3 year figures bare min mind. Occasionaly and in exceptional circumstances 2 years.

Crashandburn

Conrad wrote: »

Low rate prime lenders need 3 year figures bare min mind. Occasionaly and in exceptional circumstances 2 years.

You sure?

Some do 2 years. Some do average of 2 years. Some want 2 years accounts but will apply income calculation to latest year if it shows an increase to the previous year. Seen some do 1 year and 6 months management accounts. All of this still low rate prime lenders

WellKnownSid

Conrad wrote: »

Low rate prime lenders need 3 year figures bare min mind. Occasionaly and in exceptional circumstances 2 years.

Nope. Our mainstream lender only wanted 2 years as per their documentation. Got 5 yrs fixed at 3.99% - for 70% LTV, is that not an ok prime rate?

emv

I'm in the same situation, preparing year end accounts. We have a limited company that is showing a profit this year after its first 3 years of small losses. I take a minimum salary & took some parental leave this year as well as having a separate self-employed income that meant I didn't want to take too much from the limited company. But I think I need to take dividend payments to take me up to the tax threshold to maximise my income for a mortgage application. In this current year the company will be able to afford to increase my salary right up to the new tax threshold & should be able to pay a dividend on top. But how will I prove this to the mortgage company? I can use payslips to show that the company is paying an increased salary & will they calculate the dividends to be at least equal to last year?

At the moment we don't have certified accounts - will we need these?

Emmavix

property.advert

One the one hand these lenders want accounts when on the other hand they claim that accounts can be misleading.

The main problem for a small business is that publishing large profits costs money in taxes and mitigating your taxes via prudent accounting practices leaves you with insufficient profits to get the mortgage you want. Outside PAYE, most haven't a clue how to read small company owners finances.