Company Director and Mortgages

holly_hobby

You can only borrow renumeration that is reported to HMRC - as those are your declared earnings and generally proven for the employed by payslips/P60, and the self employed by SA302s and/or accounts.

And thats the same with most lenders.

So simplistically, if you only declare drawings of 21k to HMRC, this means that you are taxed and pay NICs on 21k accordingly. Which means that as you aren't declaring 27k drawings/earnings (as per your example) , you obv can't apply for a mge saying you do (as your SA302s/accounts will confirm).

Being SE (Ltd Co) myself, I do appreciate (for tax purposes) that it makes good sense to mitigate and plan/delay withdrawal of income and profits where possible (traditionally low basic & divs) to keep your tax/nic liabiity lower than you otherwise would incur - even leaving profit within the company to facilitate this. However, as noted by posters above, this isn't always compatible with financial application requirements - and hence their comments that you/we can't have the best of both worlds, and has been discussed to explain why you have currently found affordability issues with your enquiry.

Whilst your comparative employee doesn't have this luxury of managing how/when they declare income, with their employer declaring to HMRC their full renumeration eg 27k. and they duly being taxe on the 27k - which is why the 27k can be used for income multiple purposes with regards a mortgage - and whilst I do take your point on their base line take home income probably matching your own, this doesn't wash for mge assessment.

This is where the heady old days self cert mortgages came into their own (and why they where originally marketed solely to self employed peeps, given as we say that they will often restrict drawings to mitigate tax).

Anyhoo, if you are a Ltd Co (which it sounds as if you are), you may be better working off your net profit (and not declared director drawings), there are certainly a few lenders that will consider this, Clydesdale Bank being one of them.

Engage an experienced broker whom should be able to make quick work of this enquiry (given every else stacks up of course).

Hope this helps

Holly x

marginex

Thank you Holly!

dshart

As Holly says you may be better working off your net profit especially as you are sole director of your company and have 8 years of trading.

I managed to get a mortgage with HSBC in a similar position and I only had one year of trading figures. Mind you I was a premier customer and they had been trying to get my mortgage custom for a few years previous.