IT Contractor/Ltd company mortgage question

Chris_Wright_3

I'm banging my head against a wall trying to find the best option for a mortgage and hope someone can help.

I am an IT contractor on a daily rate. I know of several specialist brokers who will turn my day rate into a mortgage offer. That is fine. Let's call this option 1.

I also know that any high street lender will consider me based on the salary and dividends I take from my limited company (of which I am the only shareholder). Option 2.

However I, or rather my limited company, have multiple sources of income. On top of my day rate I have a few monthly retainers for freelance writing work.

I want option 1 to take into account the fact I have multiple sources of income, and thus borrow more money. Alternately I want a lender to consider my companies daily/monthly income (which is more than my basic day rate) and lend based on that.

I seem to fall between a gap of option 1 and 2, and no broker seems to have any ideas. I can't be the first person to ask this question. Any ideas?

kingstreet

What do your last three years' SA302s show?

It may be easier to simply go the "self-employed" route and use your SA302 income.

Chris_Wright_3

Sorry I missed a vital detail. I take a minimum salary out of my company, and dividends. But I leave the majority of the cash in the company. So my SA302's aren't as impressive as they could be. This route would offer less cash than going just on main day rate.

But there is no option I can see to take 'multiple day rates' or sources of income.

Let_Us_See

This is not an complicated as you think. Phone a couple of brokers and briefly explain your situation and most should be able to help.
It is just a question of "presenting" the application in the most favourable light!

kingstreet

SA302s show your total income for a given year, director's remuneration and dividends included.

I have one of my client's copies in front of me.

Pay from all employments £15,800
Dividends from UK companies (plus 10% tax credits) £20,000

Total income received £35,800.

The total is the income the lender took in establishing affordability. He is a director of a limited company.

Annisele

It doesn't sound as though OP has any problem getting a mortgage - his problem is borrowing the amount he wants.

A few years ago he could have done this as a self cert, but that's no longer an option.

I think the fact the majority of the cash is left in the company takes this out "any old broker should be able to deal with this" land - I suspect OP needs a specialist, and even then he may struggle.

OP - are you able to give any indication of the figures you're talking about? Even if it's just as multiples; eg you want to borrow 2x your company's profit but that's 10x the income as stated on your SA302s.

Let_Us_See

Definitely not any old broker....hence my recommendation of phoning a couple of brokers for initial chat.

Self-cert? What's that?;)

GMS

There are lenders who would consider the net profit of the company.

Possibly a few ways to do this. Speak to a broker and see what they say

Chris_Wright_3

Annisele wrote: »

It doesn't sound as though OP has any problem getting a mortgage - his problem is borrowing the amount he wants.

OP - are you able to give any indication of the figures you're talking about? Even if it's just as multiples; eg you want to borrow 2x your company's profit but that's 10x the income as stated on your SA302s.

Thatis exactly it. I can get a mortgage, I just need a bigger amount. My company net profit (averaged over a few years) is about 2x my own personal income from same company (the rest is left in the company). I want to borrow 5 or 6 times this net profit.

Chris_Wright_3

GMS wrote: »

There are lenders who would consider the net profit of the company.

Possibly a few ways to do this. Speak to a broker and see what they say

I've spoken to several. Either they will quote based on my salary and divs (which is not very much) or my day rate. No one will quote based on all the income streams into my company.

There are lots of brokers dealing with IT contractors, but not ones who 'IT contract' and have additional streams. These streams are just ignored, which is holding back my lending power.

kingstreet

I didn't properly read the last post before I responded to it.

Yes, an SA302 is no use if you want retained profit taken into account.

The maximum amount you'll get anywhere is 5x income, less the cost of dependents, credit, maintenance etc and assuming a 25+ year term.

No lender will lend you 6x today.