Mortgage Application - Full Declaration of Income?

Chris_Justice

Hi,

I am a company director but also draw approx £30k PAYE wage from the company, enough for my mortgage application purposes. When making the application will declaring the £30k salary and providing my payslips be ok or would I additionally have to declare my shareholding and dividends?

My concern is that as an employee I would get a mortgage without any problems but declaring the shareholding could stuff the application up as they would view me as self employed. Is it fraudulent to declare less then your full potential income?!

Cheers.

Dave_Ham

Almost all lenders have a question that asks if it is a family business or if you own over 33% of the business, irrespective of PAYE income..

I would be an idiot if I said no-one ever just puts this as employed income and hopes the lender does not check at Companies House, although all of this information is easily in the public domain if they do..

Conrad

If you do put yourself as employed, the lender would expect a non home address as your place of business. Strictly speaking you are self employed in a lenders eyes.

Chris_Justice

Well the business address is actually listed as one of the other directors homes since there are 4 of us in total. I currently have a 35% holding which would be reflected at Companies House. It's a pain of a situation because if I earned a straight £30k PAYE there would be no issue, the fact that I earn more than that is a problem though! Obviously inflating income is a fraudulent issue, is that the case for deflating income though?!

Conrad

You can deflate income, but if your office address reads like a home address, it will probably get picked up.

Being self employed is not an issue as long as the income stacks up. How long have you been self employed?

Sounds like a case for a small Building Society that can take a view.

Dave_Ham

Deflating income is not the case, moreover misrepresentation of your current employment status.

I am not being funny by saying that, but if you incur legal costs, valuation fees etc. etc. only to get the mortgage offer pulled 2 days before exchange as someone done an audit then you will rightly be pulling your hair out...

What you have said goes on, worse still people manage their PAYE for specific months/years in order to get the mortgage they want/need although you will not get me or unlikely anyone on here advocating this..

I appreciate how frustrating this can be

Chris_Justice

I'll give some more specifics about the situation! I'm not purchasing a new property but actually trying to take a friend off the current mortgage. I own a place with 2 mates and one wants to leave and set up with his lady. As a self-employed director the lender wouldn't let us remove him but if i'm PAYE then they would. Basically I want to tell them i'm on £30k PAYE and can provide the payslips etc, all properly drawn up by the accountant and run through HMRC. Would it be fraudulent if I didn't declare the dividends/share-holding?

The_J

You are self employed. To declare otherwise is fraud.

Why can they not accept you as self employed director of a ltd co.? Have you only one years accounts?

That "salary" could be stopping the company from being profitable. What is the net profit of the business? Would you lend £500,000 to someone who has just started a company and is paying themselves a salary of 150,000 a year when on closer inspection the company is making a loss of £150,000 a year? Just because the numbers are smaller doesn't make it less relevant.

Ludicrous that you are even thinking of declaring yourself as employed. You aren't, it will be picked up and you'll never get credit again if they pursue it as fraud.

Chris_Justice

Nail on the head right there, only 1 year of accounts. The company is profitable (30k salary out of an available £60k profit) so they wouldn't find a company making a loss. You've pretty much answered my question though, I was wondering if deflating my income still be considered fraud and I guess it would! Oh well.

The reason I was asking about this is that the alternative (which will now become the reality) is that I have to sell my flat even though I can more than afford to keep it. B***ocks

Conrad

The_J wrote: »

Ludicrous that you are even thinking of declaring yourself as employed. You aren't, it will be picked up and you'll never get credit again if they pursue it as fraud.

MP peter Mandelson was caught red handed by Chelsea Building Society and NOTHING happened. He was afterall paying the mortgage perfectly well.

I'm not condoning application manauvering but I assure you it's completely widespread, as is the case with CV manipulation.

It's worth noting 99% of owners do not get repossessed, so the market is very well ordered. Grown adults are pretty capable in the main.

Ken Livingston and millions of others put thier income through a ltd shell to reduce Tax - I guess all these are fraudsters too.........

I'm not condoning truth bending but I have to be grown up and accept it's completely widespread.

GMS

Have you considered a remortgage with another lender? There are lenders who will accept 1 year self employed.

How much do you need to borrow and what is the place worth?