Company Director, 25% Owner, 2 Years, Mortgage?

abercrombie2014

I need some advice.

I've been a company director for just over 2 years, and I own 25% of the company (so considered self employed).

I was recommended a mortgage advisor who just didn't give me any confidence, so in my frustration I ditched them rushed into trying to sort a mortgage myself.

I applied with HSBC and received a DIP online (so a full credit check was done). However they are now asking for 3 years accounts and tax returns, but I only have 2 years of these. They said their underwriters will consider 2 years with an additional years project from a certified accountant.

Also their online system has a glitch and has me stuck in a loop asking me to select a property valuation option, thanking me for the selecting, then asking me to select again. I called HSBC who said call the valuation partner, who said they can't proceed without instruction from HSBC.

I'm under pressure to sort out a mortgage as quickly as possible. I'm not sure whether to proceed with HSBC and risk wasting time and not getting the mortgage, or whether I should cancel this application and try a lender who will accept 2 years of statements.

Any advice would be much appreciated.

Thrugelmir

If you are a Director then you are contractually an employee of the Company. Shareholdings held in a Company are a different matter.

With a 25% shareholding you are a minority shareholder therefore have no control of the Company either.

You'll struggle to find any accountant willing to certify a profit forecast.

kingstreet

Plenty of lenders accept two years' SA302s as evidence of director salary and dividends. An average is taken, unless the latest year is lower, in which case that year's alone will be taken.

It's entirely up to you to decide to change to another lender or stick with what you have so far; once you've established if you can meet your chosen lender's requirements.

amnblog

A good broker can sort this no problem provided the business is generating sufficient profit (without projections).


HSBC would not be my bet for a swift turnaround.


Engage a broker.

abercrombie2014

amnblog wrote: »

Engage a broker.

What advice would you give on how to vet a broker?

abercrombie2014

Thrugelmir wrote: »

If you are a Director then you are contractually an employee of the Company. Shareholdings held in a Company are a different matter.

With a 25% shareholding you are a minority shareholder therefore have no control of the Company either.

Just to clarify for anyone else reading who is in a similar position - what I meant was that purely for lending purposes there is a threshold where if you own more than 20-25% of the company that employs you, you as considered as being self employed.

abercrombie2014

amnblog wrote: »

HSBC would not be my bet for a swift turnaround.

Sorry forgot to ask, is this bet based on your experience with HSBC in general?

amnblog

Based on my experience of borrowers coming to us having failed to secure lending elsewhere.

ethank

HSBC are known for being very picky and risk averse in their mortgage lending. I have an account with them and they declined me as I put too much money into savings with another bank. They classed the savings transfers as an outgoing!

amnblog

ethank wrote: »

They classed the savings transfers as an outgoing!

They are - for them!

Keekles

HSBC will consider the lower of dividends / net profit for affordability purposes, averaged over 3 years accounts. If the latest year is lower than previous, then it will be based on the latest year only.

In the event (such as this one), they will consider less than three years trading for existing customers that are able to provide SA302s and 3 months' business bank statements.

In your scenario, the projected accounts should be reflective in your year to date bank statements else it will be subject to heavy scrutiny.

As others have said, it may be wise to engage a broker; however you certainly meet their expectations from a criteria perspective if that's what your concern is. HSBC should provide a mortgage offer which is then subject to valuation - so actually, the valuation issue you're having online isn't necessarily a crippling factor. If I were about to spend a six-figure sum however, I'd take the time to head into the branch to resolve the issue.

FWIW; the above is based on actual experience in writing business via HSBC.