Self-employed Mortgage / 1Yr accounts? HELP :P

aCilnv

Hi All,

i wonder if anyone has any advice.

My wife and I are looking at buying a modest property in South London.

Details as follows :

Cost : £250 000
Deposit: £37 500 (15%)
Looking to borrow:£212 500

Our financials -

My wife have had her own company for the last 3.5 years.
The net profits before dividend and corp taxes for the last 3 years were:

2011/2012 -£ 75 000
2010/2011 - £ 60 000
2009/2010 - £ 44 000

Over the last 2 years, she's paid herself through salary and dividends about £41 000 per year.

I am a co-owner in a limited company. We started operating in June last year (2011) and our 1 yr accounts are due now (being prepared by the accountants).

My business partner and I both went the route of being "salaried directors", each of us being on £60 000 per year plus any dividends (we paid one of £10 000 to each of us last year).

The company is doing well (touch wood) and our projected profits for the year is roughly £100 000.

Now the problem - I went to see Natwest, with whom I've been banking for 10 years and they told me that the mortgage application would have to be done on my wife's salary only as my income counts for nothing, having only had 1 yr worth of accounts under the belt. It this normal ? Is there anyone that will lend to someone in my situation?

What irritates me is that i am salaried, pay tax on PAYE and still the bank sees me as self employed.

Any other options ?


Many thanks for any help/advice..

Calvin

Dave_Ham

Hi Calvin,

The banks are nervous of the self employed still, none more so than Natwest.

Unfortunately you and business are intrinsically linked financially to each other and the dependent success/failure.

That said, there are banks that will lend to you in this situation although there are a few other variables.

Suggest you either engage a mortgage broker or do some further research online.

Forget HSBC and Santander as they will not like the case for sure.

Good luck

beetle12

Hi we had similar problems as my husband is a contractor and all main lenders wanted to see 3 years accounts and loads more information we couldnt provide. I did some searching on the internet and found a company that specialises in these types of cases - they actually have managed to get me a mortgage with a company I had heard of at a decent rate and their fee is very reasonable and refundable if you dont get the mortgage. Do a search for contractor mortgages on the internet there are several companies out there (you dont have to be a contractor).

aCilnv

Thanks Dave/Beetle,

I am just wondering if it's an option to "sell" 31% of the shares in the company to my 1yr old son? Is it possible? That way I would be seen as employed by the company as I would own less than 20% of it. Would that make those issues go away ?

Kind Regards,

Calvin

Wh05apk

Lenders are wise to this sort of thing, if it's a family business they will likely ask for details /accounts.

Dave_Ham

You are essentially trying to circumvent mortgage criteria.

You may require some face to face advice on this, rather than an open forum where you can have the risks explained in detail.

In answer to your question, yes in some mortgage lenders eyes it will eradicate the issue. Whether that represents the best solution is your call..

aCilnv

Thanks for all your advise guys (and girls).

Spoke to a mortgage advisor and seems that they can help.

Kind Regards

Calvin

Dave_Ham

No worries at all - good luck