Mortgage Application

brubaker_2

Hi guys

I recently applied for a Mortgage and the survey/valuation came back ok. My LTV is 70% and I am a sole director of a limited company.

The advisor contacted me and stated that the underwriters will only accept the Mortgage if I increase the deposit. This is because they have calculated the two year average income to be 20% less. Instead of using the directors dividends and remuneration for one of the years, they have used the companies net profit instead. They will not take into
consideration the dividend's as some of the funds (20%) have been taken from retained profits (from previous year) as it can jeopardise my on going affordability, despite the company having significant funds available to me.

If they are to use the net profit for one year, then they should be consistent and use the net profit from the previous year which is 3 times more.

The reason for my net profit being lower than the previous year, is because I had personal family issues and had to stop work for 4 months, which was a one off.

My accountant tells me he has not encountered a situation before where by a Mortgage company have overlooked the physical money withdrawn from a company in favour of a net profit value – which is often seen as a subjective value.

What are your thoughts?

Thanks in advance.

ACG

New lender?

amnblog

I don't see anything surprising in this view being taken by the Lender.

Cases like this are best handled by brokers with good self employed experience.

Sounds like you either went direct or to a broker with limited experience of the self employed.

With a case like this issues around retained profit and dropping income should have been considered before application.

brubaker_2

The lender is actually my bank who I have been with for a number of years and have a business account with them for over 6 years.

My Mortgage advisor is going to appeal as he agrees with me.

They have not asked for an SA302, although I have requested one from HMRC.

Am I wasting my time - It appears that once an underwriter has made a decision, they don't like to be told different.