Self Employed Mortgage

LynneB_2

My partner and I are both equal share (50% each) directors of our business. Last year we took on new premises and invested fairly heavily so only showed a low net profit of £5000. We own our home outright and wish to make some improvements so would like to get a mortgage for £50k. Our annual accounts state that our salary is £6600 PA each and the rest is coming from our directors loan account - there have been no dividends. Our drawings from the business are a total of £2000 per month (1200 for him / £800 me). When approaching lenders what earning details do we give - our actual monthly drawings? Does anybody know if we stand much chance of being granted a mortgage as the first broker we consulted gave us the impression that the self employed are struggling particularily at the moment. I should probably mention that we are in Northern Ireland as we were also led to believe that not all lenders operate here.

holly_hobby

I am presuming that you operate a Ltd Co from your description of yourselves as equal share directors.

As you are aware controlling directors of a Ltd Co are treated as being self employed for mortgage and financial application purposes.

That being said, a lender will require audited books for their determiend period.

What factors the underwriters will ordinarilly look at as part of the trading examination are, type of business, length of trading (2 yrs+ of profitable trading will give you a better chance of placement), the net trading profit, your drawings and dividends in comparison with the NTP, to achieve an overall picture of the continued viability of the business, and how much turnover and profit the business generates, in order to decide a level of borrowings (if any) accordingly.

I am unsure as to what 50k equates to as a LTV on your property - but if you can keep it under 75% LTV that should also help your cause, as will or course a nice clean credit record.

I am based in mainland UK and not currently in mge placement, so can't assist with current NI lenders - in any event, your best bet is to use a whole of market broker, whom will not only source the most suitable lender and product for you, but should support you throughout the whole application process too.

Hope this helps

Holly

Thrugelmir

Repayment of your loans made to the Company will not count as earnings.
What matters is the profitability of the business. So on the figures you've given the business made £17k in the last financial year.

One assumes that profitability has increased significantly since. If the business has the available cash to repay £2k of loans every month.