Nationwide don't value "net profit"? Arghh!

amaze

Hi,

Just had a very annoying experience (and still is). I called nationwide approx 8wks ago and asked them if they take net profit to count as my monies earned (I own 100% of a limited company and have done for 4 years, have all certified accounts etc).

They said yes so I apply online put in all details pay for survey (£700!) and everything is fine!

Today I get a call from them claiming they DON'T take net profit figure into account (which were £203,000 for 2006 - last accounts finished) only my "salary" (which was £43,000). Everyone who owns a business always takes out as little as possible for salary due to tax reasons, but I own 100% of the company so all of the £203k net profits are mine. I could happily go to the bank and draw out the cash..!

So first question is are they being serious and do they not take net profit into account? Anyone got experience with this? Also does anyone else suggest what else I can do as I feel I have just wasted 8wks and £700 and don't really want to leave it there

Which follows on to... So now they are only offering me a morgage for £150k, the house is costing £300! I was willing to put down a 25% deposit so I am approx £75k short. I have this in my business account and could "draw" it out but I will be taxed heavily on it... Any tax experts in "the house"?

Any feedback greatly appreciated as at the moment I'm at a loss!

Thanks

JoeK_3

You are over reacting about paying tax on all that money.

You appear to have an extremely profitable company and drawing a good salary. Unfortunately all lenders have different criteria when assessing applications and incomes.

Did you apply direct or through a broker?

Has the survey taken place?

If not you can request that this is returned.

JoeK

amaze

JoeK wrote: »

You are over reacting about paying tax on all that money.

You appear to have an extremely profitable company and drawing a good salary. Unfortunately all lenders have different criteria when assessing applications and incomes.

Did you apply direct or through a broker?

Has the survey taken place?

If not you can request that this is returned.

JoeK

Hi,

Yes maybe I am, but the thought of paying £30,000+ tax annoys me! Just wondering if anyways around this...

Yes the problem with NW is they said they WOULD allow for net income when we discussed it an early stage then revoked.

Yes the survey has taken place. This whole process has taken approx 2 months... As you can imagine I'm keen to get into my new home.

Thanks for your reply!

scottp_2

can you not take a big deposit out of the company as dividends? or start taking quarterly or monthly dividends out of the company to increse your net income?

Get yourself just below the tax bracket and you will only pay 20% tax on it.

Sorry for the quick and rubbish reply, i'm in a rush, and sorry if it doesnt help!

thanks!

JoeK_3

It looks like you are going to have to appeal to a higher level of management inside Nationwide.

If this fails, you will need to arrange this with another lender but it looks straight forward to me and most lenders would jump at the opportunity to lend to you.

£700 looks an awful lot of money for a valuation fee.

What is the property value?

JoeK

Redbedhead

Speak to you accountant. If you are that profitable you should be able to take money out as dividends and this would attract a lower rate of tax.

silvercar

Today I get a call from them claiming they DON'T take net profit figure into account (which were £203,000 for 2006 - last accounts finished) only my "salary" (which was £43,000). Everyone who owns a business always takes out as little as possible for salary due to tax reasons, but I own 100% of the company so all of the £203k net profits are mine. I could happily go to the bank and draw out the cash..!

Totally agree.

And the comments about taking salary as dividends are true but only work upto the point where you hit the higher rate tax bracket. Hence the OP still has his money within the company.

On the mortgage application form there should be space (and if there is not, use the "other information" box) to show your assets. This money still in the company is a asset that you own 100% and when inculded in your form should help the lender be flexible.

You now need to persuade your contact at Nationwide to present this infor tho the underwriters.

If you see a mortgage broker they should be able to help you make your application in the best light and highlight this info to the lender.

Worked for me! Good luck!