Director (Self-Employed) Mortgage Using Two Different Company Accounts

wellbored

Hi all,

I'm currently in the process of trying to get a new mortgage (I have been with HSBC for the last 5 years).

The problem I am having is that as I am a company director (treated as self-employed by the banks) they are asking for 3 years accounts. This usually wouldn't be a problem as I was a 50% holder in a profitable Ltd business for the last 4 years. However, in January 2012 I broke away from my business partner to start my own business (in the same field) for which the first set of accounts (covering a 15 month period - again profitable) are being drawn up in the next couple of weeks.

Does anyone know if there are banks that would accept accounts from two separate businesses to make up the 3 year history. I have filed self assessments on all of these years and I have requested SA302s from HMRC to back this up.

I'd appreciate any advice.

Many thanks

Darren

Dave_Ham

Hi Darren,

There will definitely be solutions and you were correct to order your SA302's as these will be needed.

May be worth having a formal chat with a broker, although definitely be solutions.

All the best

dunstonh

When speaking with lenders or staff make sure you dont muddy the waters by using the term "self employed". You are not. Staff often get limited company (own company) and self employed people mixed up and ask for things you dont need.

wellbored

Thanks Dave, I have had a quick chat with one broker who dismissed the second companies accounts so perhaps I need a different broker.

Dunstonh, thanks for the advice, I definitely push that it is a Limited company but from what I have seen as my stake is above 25% they will treat me as self employed anyway?

Dave_Ham

Poor broker, would be amazed if this cannot be arranged.

holly_hobby

No, for mortgage purposes, if you are a controlling director of a Ltd Co (ie - shareholding in excess of 25%), you are classed as Self Employed - SA302s are the easiest way to go (although the lender may also request sight of accounts and/or accountants ref).

The fact you have remained in the same field of business, will certainly help (same clients ? or availability of business ?)), you will need an experienced broker, whom should in the first instance bounce this off and hopefully place on an AIP with one of their lender BDMs (via their liasion with their UWs).

Depending upon how your co's income is sourced, I would also take with you copies of any contractual supply contracts or future engagement contracts you have (with details of any renew agreement), which will further go to illustrate the future (all things being equal !) gted income of the company for that period (combined with your previous experience that you are drawing on, and that you already have a foothold in the market you operate in ..... you're doing this to paint a picture and its all about giving the UWs confidence and reasons to lend, rather than concerns as to not.

I would say that if this were a new'ish start up, in a completely different field to that previous, you would IMHO struggle, until you had at least 2 yrs audited books - which is what I think you're current broker is assessing this on.

Anyhoo, hope the above helps ... goodluck and let us know how you get on !

Holly

Thrugelmir

The financial history of the previous Company has no bearing. As an underwriter will have no insight into the respective financial contributions by you and your ex partner to is profitablility.

wellbored

Hi Holly, thanks for the information - it's a great help. The broker I spoke with previously bounced it off a Halifax BDM who said they would consider 1 years accounts. I'm not sure whether the broker mentioned that I had a different business for the years before. Whether 1 years accounts would actually get me an AIP remains to be seen.

Both businesses have been in the web design sector and I carried over a couple of old clients into the new business. Most projects are 2 to 4 month jobs so at any given time I could probably come up with 3 to 5 examples of current/future work.

Also, if it helps, this will be a joint application with my partner who has been in a stable job for over 3 years and has a salary slightly higher than me. I'm guessing a good history of 5 years of on time mortgage payments to our current provider won't make any difference to the application?

holly_hobby

The relevance of the prev business, is not really from a financial point of view (ie their books), but to demonstrate that although a relatively new business, your experience in the sector and market extends beyond this - which UWs may choose to consider.

Also, if your income hasn't dropped, and you have retained/and gained new contracts, between the 2 would demonstrate some sustainability too.

Of course partner will help, but this will be down to the UW, your score, and how well presented and packaged it is by the borker.

I would go for a full applicaton assessment (hold survey of course), rather than an AIP, which can fall out of bed on full assessment/uw.

Get your broker's little legs working !!!

Hope this helps

H x

wellbored

Thanks Holly, I didn't realise we could go straight to a full application. I would feel much happier having that rather than an AIP (I have seen a number of AIP's unfolding for self employed people at the last minuted on various forums).

Thanks again!

holly_hobby

Either that or a DIP (full CRA check).

NB - with a full application you will generally need to inc details of the property to be purchased, which of course could be changed after UW and personal status has been assessd and agreed. (if you get what I mean, if not, your broker should be well versed on how to manage the process).

The IMPORTANT thing is the lender is clearly instructed NOT to go to survey until personal UW has been completed, and they have separately obtained your permission to instruct their surveyor (vital if you will have provided the survey fee by cc/debit card on submission of your mge app).

Once/if you have the green light on your income etc, you can then let them go to survey, either on the property detailed in the app, or if this has altered between submission and completion of UW, of the new property details you will instead provide (notwithstanding any change to survey fee, as a result of any subsequently amended pch price).

Hope that makes sense, your broker will walk you through the whys and wherfore's on this and more ......

Hope this helps

H x