Mortgage - Single company director (figures need explaining!)

Cpt_Kenrow

Hi,

We recently put in an offer on a house which was accepted. At this point it didn't occur to me that getting a mortgage would be a problem. We have over 60% in cash, an existing unmortgaged house that more than cover the difference and what I know I earn more would easily secure a mortgage. But, my personal and company accounts are complicated...

As you would expect income has been minimised to around £7.5k pa for myself and my wife. On top of this I haven't taken a dividend every year. This should be fine you say as some lenders will look at retained / net profit.
For every single year up to this (10+) my net profit has been fairly consistent. However, last year I moved a load of money into a pension. My profits look pretty small this year as a result. The mortgage broker tells me this is all the lender will consider, irrespective of previous years and a perfectly good explanation.

Any ideas?!

ACG

Anything you could do to make this difficult... you have done. Most people try to make it easier :-P

I imagine this can be done, some lenders will take an explanation as to why there was a dip and a letter from an accountant confirming it should go back to normal. A one of transaction like that can be explained so im sure it should be possilbe at that LTV.

Probably not high street lenders, but I dont think that will mean high rates. Its strange your broker seems to think otherwise, although he has more information that we do.

I would suggest finding another broker - possibly one more experienced?

Cpt_Kenrow

ACG wrote: »

Anything you could do to make this difficult... you have done. Most people try to make it easier :-P

Nope - I think I've covered everything!

Will try some more brokers and see where I get. If anyone would care to recommend a broker, that would be a help.

Thanks,
Chris

Senior_Paper_Monitor

Acceptance of voluntary payments into pension fund by limited company as income/profit requires a clear demonstration of the company's underlying profitability over medium term and only a very small number of lenders will enter into the discussion (based on pre-MMR experience) but haven't tried to get one through since (has spurred me to go and update our database on the issue).

ACG

Senior_Paper_Monitor wrote: »

Acceptance of voluntary payments into pension fund by limited company as income/profit requires a clear demonstration of the company's underlying profitability over medium term and only a very small number of lenders will enter into the discussion (based on pre-MMR experience) but haven't tried to get one through since (has spurred me to go and update our database on the issue).

Not a bad idea that. I put together a spreadsheet but could probably do with going back over it... I say that, but this time next year it will no doubt be in the same state.

Mortgage_Mark_2

What do you do for work into the limited company? If you're a contractor I think you're looking it in totally the wrong way. If not, and you are genuinely a straightforward director, then I agree with the previous suggestion of finding a more experienced broker.

Cpt_Kenrow

Mortgage_Mark wrote: »

What do you do for work into the limited company? If you're a contractor I think you're looking it in totally the wrong way. If not, and you are genuinely a straightforward director, then I agree with the previous suggestion of finding a more experienced broker.

Most of my income is from online publishing. In simple terms I make money mainly from advertising on websites I own. I don't employ anyone and I don't really do contract work for anyone.

Not sure what that makes me?!

ACG

"Just" normal self employed.

There will be lenders for this. If you go to a fee free broker they may not have the time to invest in this as its not straight forward. Likewise if you go to someone not experienced then they may just take the general rule of thumb as gospel and you will get a standard response.

I would not want to guarantee a lender for this, but I would be very surprised if there was not a lender for it, although MMR will not have helped.

Mortgage_Mark_2

Cpt_Kenrow wrote: »

Most of my income is from online publishing. In simple terms I make money mainly from advertising on websites I own. I don't employ anyone and I don't really do contract work for anyone.

Not sure what that makes me?!

ACG's response pretty much sums things up for me really - there will quite possibly be a solution; have you spoken to your company accountant to see who they recommend?

Senior_Paper_Monitor

I've just checked with the two lenders we used earlier in the year for similar cases and they will still accept the argument that voluntary additional payments to pensions can be 'counted in profit'.


Not every lender will consider this by any means - will be 'outside criteria' underwriting for those that will. One of the above told me that we can't do this above £500K borrowing any more.

Cpt_Kenrow

Senior_Paper_Monitor wrote: »

I've just checked with the two lenders we used earlier in the year for similar cases and they will still accept the argument that voluntary additional payments to pensions can be 'counted in profit'.

Thanks, useful info indeed.