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Self Employed mortgages
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harvey115
Posts: 691 Forumite
Hi
Just need a bit of information on a backup plane.
Circumstances:
Self Employed
1 Year's accounts (Chartered Accountant firm) [18 months covered]
Criteria
Is there a lender who provides mortgage on company's profit instead of salary and dividends with the above circumstances? If so:
- What would be the profit multiple?
- Would they consider pre or post corporation tax profit?
PS - the first year accounts I submitted covers 18 months instead of 12, so its rather 1.5 years accounts, if it makes any difference.
Just need a bit of information on a backup plane.
Circumstances:
Self Employed
1 Year's accounts (Chartered Accountant firm) [18 months covered]
Criteria
Is there a lender who provides mortgage on company's profit instead of salary and dividends with the above circumstances? If so:
- What would be the profit multiple?
- Would they consider pre or post corporation tax profit?
PS - the first year accounts I submitted covers 18 months instead of 12, so its rather 1.5 years accounts, if it makes any difference.
0
Comments
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Thought you were all sorted through the Clydesdale?
This is strange, did you retain the profit in the business given I assume your profit was higher than salary and dividends?
There are other lenders, but not many and they are likely to want a projection from the accountant also...
I have seen some of your other posts and it would appear that you have a fair handle on the market, so you may need some more specific help than what we can give without the full picture although will try and help as and when can.
I thought from distant memory that you got the full offer?I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Profit is usually distributed as dividends to shareholders. Is the profit being reinvested into the company?
The amount considered is the post-tax dividend grossed up to equal a pre-tax income. If the dividend you get is £8,000 then the company would have earnt £10,000 in profit and paid £2,000 in tax (small profits rate) so you would declare the grossed up amount of £10,000. Whatever you declare as long as you make it clear then its fine.:footie:Regular savers earn 6% interest (HSBC, First Direct, M&S)
Loans cost 2.9% per year (Nationwide) = FREE money.
0 -
Dave, thanks for the post.
Yes you are correct, here is the full picture (sorry I skipped that):
- Got an offer from Clydesdale (valid until 18 Sept)
- Offer is on my contract (contractor mortgage)
- Contract expires on 5th Oct
- Exchanging contracts (10% deposit) this Friday (3rd August)
- House completion planned for End of August 2012
- NewBuild
I am just preparing for a backup plan in case things do not go as planned i.e. if my contract does not get renewed and the completion gets delayed. I may be asked to produce a renewed contract in order to secure the mortgage offer from Clydesdale.
I was wondering if I can have a plan B, even though the interest rates are higher. I could be a little relaxed.
I can get projected accounts from my accountant if required by the lender.
Are there any lenders to consider?
LTV 75%0 -
Sorry I missed the profit point:
- I take salary + dividend just under 100K total
- There is more in the company left after taking the above
Since I am borrowing more then my current salary+dividend (times 5), I was considering company's profit.
PS - I am currently 90% shareholder and can become 100% if required by the lender.0 -
If your contract is not renewed then your company profits will dive. Generally though they don't check if the contract has been renewed so don't worry about that.:footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S)
Loans cost 2.9% per year (Nationwide) = FREE money.
0 -
Aha yes - now I remember the New Build added complexity..
I thought you were going to exchange with completion before the end of August so everyone was tied in and you would be protected?
So long as you can evidence a decent track record of contracting/employment and it is in a specialist area then there will be lenders at 75% LTV.
I would suggest you know there will be a backup plan and leave there for now, as otherwise you will be paying money for an insurance that will not guarantee success. I cannot imagine you would want another full offer and nor would the developer as would make them nervous.
I think keep being pragmatic in your approach with the solicitors and protect yourself, as it appears you have been doing sensibly all along.
I recognise this is an issue with New Builds, although recall in a previous post you have weighed it all up and comfortable to proceed. I think you said the house is nearly there and some good weather will see you over the finishing line??I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Dave, yes all correct.
I was just thinking of a backup plan if for any reasons things start going the other way. I was just planning in case my current offer expires and Clydesdale do not want me, I can opt to apply to another lender without the need of a renewed contract (if that is possible at all).
However looking at all that is happening with the development, things are working out okay so far.
I guess its just the feeling of wait between exchange and completion that makes amateur people like me nervous.
By the thanks for the reassurance.0 -
Do not worry, I know exactly where you are..
You run your own business as do I and probably many on here. Therefore we cannot help wanting to be in control and having all the bases covered as we do this all day every day.
Unfortunately on this one, you have to protect yourself legally (you are doing) and rely upon the developers need to get your large amount of money quickly (bet they are doing)
Aside from that, your broker must be pretty good to get approved first time and therefore there will be backup plans that can be quickly administered but try not to worry what they look like for now.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Personally I would not want to exchange with a long lead time to completion as lenders can and do withdraw offers in that period. Would the developer exchange and complete on same day?
Have you tried a semi self cert lender?0 -
Have you tried a semi self cert lender?
Interesting term, presumably you mean fast track?I am a mortgage adviser.You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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