mortgage proof of income problem!

ianmac101

I am looking to get on the property ladder (tough time to do so, I know!).

My question is that as a self-employed person who owns a company I have to show my SA302 as proof of income. This is not a problem, as I believe I can demonstrate drawing a salary that justifies the size of the mortgage loan I want to take out.

But on paper, my company has not been very profitable and has been in loss each year of trading (for the past three years).

One mortgage broker I’ve just spoken to has said that earnings from an unprofitable company might not be accepted as proof of income for the purpose of justifying a mortgage loan, because the company that it’s being drawn from fails to demonstrate it is a credible sustainable source of income.

Presumably, their thinking is that if a company is not profitable, what is to say it does not just fold in the following year or two.

Just wanted to know peoples thoughts on this, as I realize opinions, even amongst those in the industry vary greatly.

Thanks!

Mortgage_Mark_2

In reality you may struggle with a company showing a loss - do you work through a limited company as a contractor? That would be very different and would definitely be worth speaking to a specialist broker as assessing that sort of application as self-employed will lead to a whole world of pain.

ACG

It looks like your business is subsiding your income.

If there is a reason for the loss (ie buying new equipment, vehicle etc) then it may be allowed. If the business is just losing money due to your wages and not enough business that is not sustainable and that will worry an underwriter.

Thrugelmir

How is your income being funded?

caprikid1

"But on paper, my company has not been very profitable" declare the full company income ,pay tax on it.


I know amazon etc choose not to be all of us PAYE have to.

Dave_Ham

From a mortgage perspective, there will potentially be lenders that would look at this subject to the detail of course.

We placed one last month, but the client had a very tangible reason for the losses and plausible way forward.

One for a broker, if you ask in branch they will say no without knowing or yes for target purposes - if you can see anyone in branch that is.

Thrugelmir

ianmac101 wrote: »

But on paper, my company has not been very profitable and has been in loss each year of trading (for the past three years).

Then your income is unsustainable. As the paper you refer will be your annual accounts.