Directors Mortgage - Net profits

Daveygravy

Hi, I was wondering if anyone either in the industry or someone who is in our position had any luck securing a mortgage. I'll do my best to keep it factual and to the point!

I am a director of 2 companies. Company 1 - 50/50 with my wife, Company 2 Me 100% shareholder. Both limited companies. Company 1 - 4 years old, Company 2 - 1 years old.

Boring bit but relevant - As with all companies started in the last few years, banks are not willing to invest in small business in order to grow therefore most Net profits are used to support growth. Company 1 - Turnover £700k, Company 2 - Turnover £70k. Although turnover is irrelevant it may paint a picture.

Me - Paye £10k
Wife - Paye £10k
Wife (Teaching assistant) Paye - £12.5k

Total - £32.5k salaried.

As invested in major growth in my last financial year Sept 14 - September 15 Company 1 net profit was only £15k for this year, previous year, £15k, 1st year 6k. No dividends ever drawn as our mortgage is small and was 100% driven on business growth.

My situation - Am I right in thinking that the £32.5k salaries and £15k Net profit can be used as a multiple? I.e 4 X £47,5k?

Can Company 2 Net profit of £8k be added to the multiple?

We have approximately £175k collateral in our current property and looking for a mortgage of around £200k. Property to purchase will be around £350-380k.

Credit Scores - Wife - A1 = All green, never ever missed a payment. Me - 2 Satisfied Defaults both 5.5 years old (to drop off report October 31st 2016). I have never missed a beat since and have 2 small credit cards to assist in the credit repair, over 3 years old, used every month for food shop and totally cleared each month.

We have no loans and minimal outgoings.

Dilemma - I realise I will need to go direct to a specialist broker but I'm really interested in hearing if anyone in a similar situation has succeeded.

Our Net profit will be a lot higher for this years accounts (sept 30th 2016) so the sensible thing would be to wait for the next set of accounts delivered later this year (along with the satisfied defaults dropping off) then approaching a lender.

Can anyone give me a heads up whether it is worth applying with the evidence above? We could really do with moving ASAP as we have outgrown our property and with kids fighting they need their own space!

We have £15k in savings to cover costs of moving.

If you have got this far - Thanks for reading!

Welshbigman

Its probably worth going to see a broker, a good one will know exactly what to do. With 3yrs + accounts you should be in a good situation. By the looks of it your LTV will be quite low which should help.

Bear in mind they don't count the 2nd income in full

amnblog

You are in the ball park. A lot depends on the figures over the three years and how tight it is on affordability.

A couple of curve balls. Lender may consider only half of your partners second income if in a different trade.

Some lenders will work on your profit pre tax. Some net of tax.

A good broker will sort this.