Self-employed (limited company)... what mortgage?

smartmove07

I am self-employed (working through a ltd company since 1998) and most of salary is made up from dividends. Therefore my P60 payslip salary is showing the minimum possible for tax reasons. I believe the type of mortgage I would require is a self certified one. At this moment in time I would be looking to spend between £180k and £190k on the property but would only have access to about £25k deposit. This means my LTV would be around 85%. Would most self-cert lenders accept this and would the interest rate I get be grossly more than employed Joe Bloggs on the high street?

Any other comments or advise would be really appreciated.

Thanks!

smartmove07

Just to add, when people say they can prove their accounts for the last 3 years is this personally or for the limited company and what would be needed as evidence for either?

If I can provide company accounts for the last 3 years (which isnt a problem as we have been trading since 1998) would I still need to consider a self-cert or is there a different product suitable for a limited company director who's majority of salary is made up from dividends?

Thanks again!

homer_j_3

If your accountant will write you a letter confirming your annual income and dividends drawn then you shouldnt need to self certify. You may need your accountant to provide information on company accounts but its not always necessary

Cazza

As long as you can prove the dividends it won't be a problem, the "normal" High Street lenders should be perfectly happy to treat your dividends in exactly the same way as the salary you pay yourself.

smartmove07

Thanks for the replies.

How exactly would I prove the dividends? Letter from the accountant?

I actually find it quite nerve racking thinking about getting a mortgage. As the owner of a ltd company trading profitably since 1998 and no ccj's adverse credit etc. do I have anything to fear? Should I take whatever I can get being this status or am I actually an attractive proposition for the lenders?

Cazza

Doesn't sound as though you should have any problems to me - the fact your business has been going for nearly 10 years is a good thing and shows stability.

Proving the dividends could either be via a letter from your accountant (the lender will want to write for this themselves) or it could be proved by sending in copies of your accounts, as I'm assuming your dividends will show on these. Some lenders might want to write for a reference AND see the accounts, but don't worry if they do this as it's not that unusual!

Go to see a good broker in your area, but assuming your income is sufficient for the amount you want to borrow, you're as good as anyone else is for a mortgage!

smartmove07

Wow, that would certainly be very handy if I could go for a high street mortgage rather than the self-cert route, it means I can look at a 90% LTV and spend slightly more on the property. I assume overpayments are generally an option on most mortgages? I have semi-regular bonuses through my work and would like to use these to overpay on the mortgage.

I will speak to my accountant re: the letter. The only thing that may be a concern is the dividends we have taken have only really substantially increased in the last year or so. This means the accounts for the previous 3 years may not show the true salary we are taking today.

silvercar

Any profits that you haven't taken out of the company as dividends, will be shown as assets of the company - wholly owned by you. A good mortgage broker, experienced in the self-employed, will know how to show these to best advantage.

groovy_girl

hi , does that mean that if you are self employed on a limited company basis you can show high st lenders six months business bank account details ?

homer_j_3

no not all. Some will take it if you have the right equity and credit score. A good broker will be able to source you the right lenders and deals

mrtg0525

I've recently gone self-employed again after several years of being employed and had to do the bi-annual remortage dance as the fixed rate on my house had expired.

The whole thing was rather painless, the high street lenders I talked to pretty much all wanted to see an extension of my current contract with the main client and a revenue projection from my accountant. That was with less than a year's trading under my belt and everybody already pointed out that it would get easier if I was self-employed for longer.

A mate of mine who's been self-employed even longer than the OP had absolutely no problem to get a second mortgage for a flat to house his offspring while at uni, simply on the back of a dozen years' worth of audited accounts...