Is a mortgage based just on total income or weighted towards salary?

jaydeeuk1

Looking to move house in next 12 months, and whilst my cash left over each month might pay for £x amount of mortgage, I don't know how a mortgage co would calculate it. Makes it difficult to look at house prices without knowing how much the bank thinks I can afford. I'm a director with a small salary, larger div. Current house in wifes and her mums name, she is a stay at home mum.

My salary is £15000, but I pay myself roughly £30k in divs, would the fact I pay a low salary be to my detriment when applying? I'm thinking of adding my wife to the company payroll to use her tax allowance up and then do a joint application. Am I 'worse off' than if I had paid myself a £45k salary (in the eyes of the mortgage co)? The divs are guaranteed - have been paying myself roughly the same over last 2 or 3 years and hope to increase them too over next 12 months as we're increasing profits each year. I've been saving roughly £1000 a month (current mortgage payment is £500, 10 years to run) for the last year so depending on the answers to the above will determine a) if I do a joint application with wife and move home or, b) apply solely in my name as a new buyer and rent out existing property (although not sure how/if we could change mortgage seeing as she isn't working and her mum is retired, although I do give her £1500 each month)

Equity in current property I'd guess at about £30-£40k, and in 12 months should have £30-£35k saved up between us

TIA

kingstreet

Typically a lender will add salary and dividends together and take the average of the latest two years, or the latest year's alone if lower than previous.