Dividends lower than profits - is this a problem for a mortgage?

Currently trying to get an 85% LTV mortgage. I'm a 50% shareholder of a profitable 7 year old company but last financial year took more dividends than 50% of the profits by using reserves. Obviously this is fairly standard practice where large reserves have been established but my broker is suggesting this could cause a real problem for lenders as they'll all want to see evidence that the company can support my earnings going forward.

Can anyone suggest whether this is something that may stop me borrowing altogether or whether there are lenders who would not worry about this?



  • kingstreetkingstreet Forumite
    37.9K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Use HMRC SA302s rather than accounts to evidence your income, then it doesn't become an issue for many lenders?
    I am a mortgage broker. 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. Please do not send PMs asking for one-to-one-advice, or representation.
  • ThrugelmirThrugelmir Forumite
    89.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If dividends are being paid from retained reserves. Then obviously the question will arise as to whether this level of dividend is sustainable. Something which is nigh impossible to forecast. Unless the Company earns it's income from a guaranteed source , i.e. contracted.
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