Mortgage - Director in your own company

harvey115

Hi

I am planning to buy a property and apply for a mortgage. I was wondering if my current situation could pose any problems in getting a mortgage in the market.

• Job - Director in my own Company
• Company - It was created in Oct 2010 and only one annual accounts have been done so far but they have not been filed to HMRC yet (still some time left to do this)
• Salary - I take dividends and minimum salary up to the 20% threshold annually
• Employee - I have my brother as a secretary and employee in the company
• I will be taking the mortgage with him. I will notch up his pay to 20% threshold as well so around £42,000 per annum for each of

Do you think I am going to have issues with providers like HSBC and others due to me being director of the company and only have 1 years worth of accounts so far (quite a new company, started trading since Oct 2010) but profitable after the salaries and dividends as well.

Any insight as to what would be the best option to make the mortgage provider happy and get the deal?

kingstreet

Company directors and self-employed individuals are normally treated the same way, with lenders demanding an increasing number of years accounts the higher the loan to value.

I'd say with a 50% to 75% loan to value, you may get away with just one year's accounts. If you are looking for 90%, I don't see you being successful at this time.

Abbey/Santander and Principality BS will look at one year's account for the S/E but I don't know what LTV they might consider on that basis...

ACG

Principality is 75% LTV

harvey115

Hi guys

Thanks for the reply much appreciated.

I have not reached any bank yet but I am looking to get a mortgage of about £325,000. The property value I am thinking of is around £420 to £450.

I checked on almost all the online calculators about how much I can borrow and all seems to point that the application should be made with 2 applicants having 42k yearly.

I am not 100% sure about what i should do, get my brother start getting 42k from my company as well (he is in his 2nd year in uni) or get my wife the salary in the company. My is on a spouse visa and she has just arrived in th uk, so I guess banks straight decline her if she is added as the second applicant. Any thoughts on this please?

Another question regarding the mortgage deal. I checked HSBC is giving a life time tracker on 2.7%, is this a good time to get this type of mortgage or should I go for a fixed one?

Thanks

opinions4u

HSBC are the strictest of the mainstream lenders.

I'd be surprised if they'd lend on the figures provided.

harvey115

Hmm... I wouldn't want to apply if the chances are slim, any suggestions on where can I get a good mortgage on the above scenario?

Should I call up any mortgage broker?

Thrugelmir

Certainly an issue that you brother is connected to you.

There's no certainty that the salary will be maintained.

The lender may detect collusion.

harvey115

Brother is also 10% shareholder in the company and declared as the company secretary. So I thought getting his pay up could help.

Another thought, would a guarantor help the application? Are guarantors allowed in mortgage applications? Do u think I would have a good chance with HSBC if I get a guarantor (company owner as well, above 42k salary). Should I just forget about HSBC altogether? I just want to avoid a credit search where my application is not going to pass, I have 999 score in my experian report.

Thrugelmir

A guarantor is going to have a lot of disposable income to underwrite a £300k mortgage. As will have to prove their income in the event you are unable to meet the repayments.

Guarantor mortgages are far and few between in any event.

The issue isn't your credit rating but the transaction you are attempting to cobble together.

HappyMJ

harvey115 wrote: »

Brother is also 10% shareholder in the company and declared as the company secretary. So I thought getting his pay up could help.

Another thought, would a guarantor help the application? Are guarantors allowed in mortgage applications? Do u think I would have a good chance with HSBC if I get a guarantor (company owner as well, above 42k salary). Should I just forget about HSBC altogether? I just want to avoid a credit search where my application is not going to pass, I have 999 score in my experian report.

If you want to avoid a credit search then speak to the bank/mortgage provider and ask about your circumstances before you apply.

jm2926

Annual income is Salary + dividends, not just £42k salary. Your main problem is only one years accounts. Use a good broker