Mortgage - Self employed - personal debt?

Danniella

Hi there,

My husband has been self employed for 10 years and is classed as a sole trader.

He has a vehicle for the business paid through the business each month. He also has a credit card which is paid through the business.

For mortgage purposes, is this "debt" classed as personal debt?

Any advice would be appreciated.

Many thanks

kingstreet

The cost of these items may be an allowable expense and deducted before net profit is set. If the vehicle is a van with no rear windows/seats, 100% would be allowed.

If it's a car from which he derives some personal use, not all the cost is an expense and not all the credit cost would be "ignored."

Make sure the lender is aware of this. They are personal commitments, but they partly come out of pre-tax, not post-tax income depending on the business/personal split.

As an example, I split my use 66/33 business/personal.

mattpoll

If he is a sole trader, then the car is a personal debt. He & his business have the same legal identity.

amnblog

That does not stop a lender making an allowance for some of the cost if it can be proven that the business pays for it.