Remortgage after divorce

heyelp

Hi everyone. I've just been through a divorce and as part of the settlement I'm keeping the house (worth £380k) but need to remortgage for £160k in the short term to release some money to my ex.

The trouble is, despite having a lot of equity in the house, things are going to look very bad when lenders assess me for mortgage affordability.

I worked really hard and got into a good position financially but then decided to take it easy for a few years and spend more time with my children so haven't earned much lately. On top of that half of my salary and dividends were paid to my ex wife while we were together to keep things tax efficient and in the last year the disruption of the divorce has meant I have worked even less.

In the past month or so I've re-focused on work and I am confident that things are looking good financially moving forward. I own 50% of a company and we have purchase orders for £35k now, and should have POs for another 65K within the next month or so. Overheads are low so almost half of that will be my personal income. I'm aiming to take >£100k out of the company within the next year or so and have a good chance of achieving that.

The trouble is that the figures lenders seem to be interested in look very bad for me. Monthly outgoings are around 2.5-3k while my tax return for last year shows just 6k in salary and 5k in dividend!

Those numbers clearly don't add up so does anyone have any advice on the best way to tackle this? Have I got any chance of getting a mortgage given my current circumstances?

Cheers!

Wh05apk

As you own more than 15/20% of the company, you will be treated as self employed, most lenders now do this incorrectly by only taking salary and dividends, some will take your share of retained profits, if the company is showing profits then you will need to track down a lender who will use accounts.

heyelp

The company is showing profit but not much, especially in the last year. My share of the net profit for the last 3 years was only 10k, 20k and 30k. On top of that my ex and I took about 7k in salary each (hers just for tax efficiency purposes) but it seems like most lenders will only take my 7k into account. Starting to get worried now!

Thrugelmir

heyelp wrote: »

Starting to get worried now!

Suggest you reappraise your options. Rebuild your life with a longer term view rather than attempting to cling on.

holly_hobby

Salary and dividends are pertinent to Ltd Co's - as a controlling Director full audited accounts are required (2/3 yrs generally), which the UW will look at together with other aspects (inc poss a projection) such as net trading profit (i.e assessing the status of the Co's position before the division of director salaries and dividends).

If your company is not Ltd - then accounts are still reqd, but they will obv focus on the proft and your drawings.

From your post, LTV is good at below 50%, whilst an accountants projection/forecast may also be v valuable based on your confirmed orders, and what your resuting salary and dividends will amount to.

On the face of things, it doesn't look fantastic, and IMHO (esp considering the relatively low LTV), it may be an idea to initially approach your own bank, or current mge co, whom have a personal history with you, and how you manage debt, with a hope that an UW mandate may be utilised to push this thorough.

Or, you could approach a lender that has an individual underwriting approach, such as Ipswich B Society - whom have geographical restrictions for intermediary business, but accept direct business nationwide. In such a case, you will again be able to plead your case if you will ... and hope that the UW is comfortable within their mandate of the exposure you represent.

Its all in the presentation, think of yourself when bidding for contracts, to win the business you put together your proposal to evidence why you are the best option for the role, use the same mindset with this, a lender will look why not to lend - try and convince them why they should. (your ltv, credit history, trading history and secured orders are all positives)

Of course this is all based on you actually being able to comfortably service the arising mortgage payments, both now and in the longterm - any doubts to the viability, it makes sense to cut your cloth accordingly I'm afraid !

Hope this helps (good luck)

Holly