Mortgage with £55k worth a debt, possible?

chriz1000

Will a lender allow a mortgage when there is outstanding money owed to loans and credit cards? I personally have £55,000 worth of debt, however this is debt I took on for my company and repayments are made each month by my company. The company was valued at approximately £450,000 (£480,000 turnover, £140,000 profit) and has a £40,000 loan in the company name.
I’m taking home approximately £3000 after tax (not including the money to repay the debts, if this is included I’m taking home around £5000 after tax), this is hard to prove though, as I’m a company director and pay myself by dividend, although bank statements over the last 8 months will validate this. I’m unsure of who I should approach about a mortgage if anyone?

Rick62

Lenders will take account of your debts, but it will not preclude you getting a mortgage. If you own a significant share of the business (usually 15 to 25% plus) they will look at your total income, being salary, dividends and retained profit over the last two years (occassionally one year and one forecast), deduct your debt servicing costs and apply a multiple to what is left.

So on profit £140k (if this is total and attributable to you) they would deduct about £20k for the debts, then lend, typically, 4 x £120k, about £480k, maybe more, depending on your credit score and full circumstances.

herbiesjp

Just on the basis of what you have posted, your scenario does indeed look possible.

Rather than approaching lenders directly however, with a situation like yours, I would enroll the help of a fees free whole of market adviser. This way they can discuss your case with several lenders first (without running credit checks) in order to find out which lenders and which rates would be available to you

HTH

Mr_helpful

if the debts are paid by the company they will show up in your accounts and as the lenders work on net proffit which is money left after all these expenses you should have no trouble.

chriz1000

Ok thanks guys, I will get on the phone to a whole of market broker. I have two personal bank accounts, one with all the debt which is paid by the company. A standing order of just over £2000 per calendar month comes out of my business account and pays all the standing orders and direct debts in this account.
I then have a separate account which my dividend and wages are paid into, this is for personal spending and for my personal bills. i.e rent, insurance etc...