Director of ltd by guarantee company & mortgage

hohum

Hi

I'm in the process of changing an AIP into an actual mortgage offer through a broker.

It's a joint mortgage, my partner is self employed and we have reported his income based on last three years. Have SA302s.

I am a company Director of a company ltd by guarantee NOT by shares eg I can't draw dividends through the company. I pay myself through PAYE. I am registered as completing a self employment return since 2004. The ltd company has only been going for a year, helpfully over the tax year 13/14 and 14/15.

I think my broker has got it in his head that I am a director of a company ltd by shares. He keeps talking about what percentage of the company I own (not applicable, we all guarantee the company to the tune of £1 or so). I have corrected him but I think he may have got the AIP saying I'm a self employed company director. Even our accountant made this assumption when she started working with us, despite me repeating 'ltd by guarantee' (she quickly caught on!). It's a company structure more common in my industry as some grant makers won't award to companies ltd by shares. And I didn't want to be a CIC or a charity. Apparently it's really uncommon for everyone else!

Anyway I'm a bit concerned about how we're reporting my income. And if my broker doesn't get it, will an underwriter get it? Surely we'd be better just reporting my PAYE income? Or do we have to say self employed/ company director as it comes up in checking the application?

The fact that our company accounts show we made a loss in the first year may have something to do with my concern. Once they look at the loss am I going to have problems? are they going to want the accounts or my payslips?

Are we right to say I'm a company Director or is that just confusing? Obviously the difference between me and an employee is that I'm responsible for setting my own pay rate and wish to serve interest of company in a particularly legally binding way. However if company folded I would be liable to the tune of £1.

amnblog

Don't expect the Lender to understand this as they may not have seen it before.


Worth noting that lenders websites do not have input boxes for this scenario and a Limited Company (by shares entry) will bring up questions on data which does not apply. This makes everything messy.

The last similar case we had took a while for the lender to get their head around and we needed to give them 'some training'.


Your SA302's should do the trick to prove your income.

hohum

Ah good to know. We applied on the basis of my SA302 from financial year ending April 2014, although my income through PAYE this year is higher. Always good to be cautious!

I look forward to explaining this to lenders. FUN.

amnblog

Expect messy progress

saverbuyer

Is this a social enterprise?

hohum

saverbuyer wrote: »

Is this a social enterprise?

No. But a not for profit endeavour. There were definite reasons why I didn't want to go with a CIC (community interest company) set up. Part to do with beneficiaries of our activity, part to do with the asset lock required.

Let_Us_See

Lenders are going to love this.:o

Personally, I would try and process as employed director under PAYE.

hohum

Let_Us_See wrote: »

Lenders are going to love this.:o

Personally, I would try and process as employed director under PAYE.

That's what I was thinking?

I think there is a concern that once you do a search I will come up as a company director, and that could throw a spanner in the works.

Although i will only come up as a company director if you do a search for me as company director. I think. It's on the file at companies house, and I will need to indicate on my next tax return (this year ending April 15).

Not knowing what kind of checks/ searches a mortgage company do I'm not sure which is the best approach.

However this is why we employed a broker but although he has experience of company directors/ self employed I think this might be new to him too. Hence me wondering whether to suggest more heavily to him that we go ahead with me as paye. He's inclined to think better declare rather than them raising the issue.

Thrugelmir

hohum wrote: »

The fact that our company accounts show we made a loss in the first year may have something to do with my concern. Once they look at the loss am I going to have problems? are they going to want the accounts or my payslips?

Considering the Company is not for profit. Doesn't look good.

hohum

Thrugelmir wrote: »

Considering the Company is not for profit. Doesn't look good.

What doesn't look good? Are you referring to the mortgage application, the likelihood the company will want to refer to accounts, or just analysing my business based on this information? Why does the company being not for profit make a difference?

hohum

An update on this - broker has proceeded with treating me as self-employed rather than as PAYE employee. He says it has been a learning experience talking with lenders and whenever he mentioned 'director of company ltd by guarantee' he got put on hold. I suppose if you mentioned 'director' at some point in the application, you can't then pretend I'm not a director in order to bypass the brain melt on the lender's end.

Which is a bit of a blow as my income has doubled in the past tax year, but we have to rely on my SA302s which are pitiful! If we waited until April, I'd have a nice healthy return to wave at a lender. But I don't want to wait until April (and neither does our vendor!) soooo...

Looks like we're going for a 2 year fix, with mortgage term over 33 years :eek:. Fortunately we can overpay up to 10% of balance wihout penalty as I have NO desire to have a frickin mortgage for 33 years. I will also be setting us a great big reminder on my calendar to remortgage when the fix is up! The repayments are half what we pay in rent. Affordability calculations are hilarious. We can overpay and ready ourselves for remortgage in two years time, whilst saving for ongoing decor/maintenace work and STILL pay less than we do in rent. We could rent out a room and cover the mortgage with the rent, and still be under the taxable threshold for having a lodger.

The lender also wants a lower loan to value, so unfortunately we're going to have to use more deposit than planned. They are also not willing to go from £70k to £71k loan. Because that £1k is going to really make a difference on the thousands of pounds they are lending us. (yes yes, I know, it moves into a different loan to value ratio but rilly). We can accommodate this no problem and retain enough for fees/ moving/emergency fund, it's just a shame as it slows progress on redecoration/ garden etc. Plus there is a bit of me that prefers having more liquid cash than tying up our inheritance/ gifted money in bricks and mortar. It feels like such a gamble. OTH, own house! And if it all goes horribly wrong, stupidly low mortgage payment that we must make.