Getting a mortgage as a company shareholder

stanleysmum

Any help would be much appreciated here!

I need some clarification as we have been given conflicting information from our mortgage advisor and our accountant.

I am a 25% shareholder of our business and have an employed part time job elsewhere , the earnings for which are below the tax threshold.

My other half is the MD of our business and he pays himself a certain amount. We both top up with dividends and the company owes us quite a lot in a directors loan.

We thought that my income as both an employee elsewhere and a shareholder in the business could be used as borrowing power to calculate our house buying budget (we're currently on the market). We have about 60% equity in our home and we would also be using my other half's income from the business as a director and his dividends also to calculate our budget. We are about to complete our third full year trading and are a ltd co.

We have been told by our MA however that I would need to be a director for two years before I could use my dividends to get a mortgage. Our accountant was of the understanding that I could do so as a shareholder.

Both MA and Accountant are really good but I feel I'm starting to nag a little now so wanted to see if I could understand this a little better before we next speak to either of them.

Any help / advice on this would be hugely appreciated!!!

GMS

Are the net profit higher?


Some lenders would use this rather than the salary and dividends.

Wh05apk

When you refer to "MA" are you referring to the mortgage seller in your bank/building society? If so that may be your problem, lenders all have different criteria, as you have a "non-standard" case, you really would do best seeing a broker.

Let_Us_See

"Personal income" and "acceptable income for mortgage purposes" can be totally different, and to complicate matters more, each lender can have a different acceptable income criteria. Let your MA recommend (unless they are tied to a particular bank) the best options and lenders available for your own individual circumstance, or if you have lost faith, find another adviser.

Finally, ask your accountant for his success rate at processing mortgage applications!

Thrugelmir

As only a shareholder you may not tick the required boxes.

stanleysmum

Wh05apk wrote: »

When you refer to "MA" are you referring to the mortgage seller in your bank/building society? If so that may be your problem, lenders all have different criteria, as you have a "non-standard" case, you really would do best seeing a broker.

Our mortgage advisor is an independent one, although he seems to favour whichever banks are offering the best deals.

I think we need a trip to see him again to run through the options as we currently have no idea what our budget could be.

Thanks for your advice:)

stanleysmum

GMS wrote: »

Are the net profit higher?


Some lenders would use this rather than the salary and dividends.

I'm not sure if I'm honest whether the net profit is higher although I know we saw a large increase in profit in the first quarter of last year and things have only got busier since so perhaps finder a lender which favours net profit instead would be beneficial?

Thanks for the help

amnblog

A case like this can we littered with complications. A mortgage broker experienced with,self-employed cases should be able to guide you but I wonder about the background of your current broker?

You do not have to be a director for your dividend income to be counted. That said, one years dividends only will limit your options.

Dividends needs to be evidenced in your self assessment returns via SA302s from HMRC.

You may be able to get the profits of the company considered, but not if you and your husband do not jointly own the majority of the business.

The directors loans, owed by the business to you are of no value in supporting lending.