Lenders that will use dividends as income for mortgage?

marliepanda

Exactly as the title says, are there any lenders that accept dividend income as part of the salary multiplier for a mortgage?

I am planning to go and see a broker/in house mortgage adviser with a bank but as we're not quite ready to buy yet I feel it's maybe Lee emptive (though maybe I'm wrong)

I just need to know whether any lenders do include this income (as a paye who works for the govt it's all new to me) so I know whether I'm looking at 4x one income or the other.

trailingspouse

The bulk of my income is from dividends, as OH and I run our own limited company. We had to provide 2 years' audited accounts, but other than that the dividend thing wasn't an issue. That was Nationwide 3 years ago.

minimike2

Yes quite standard.

Expect to provide 2 years accounts and SA302's / Tax Calcualtions.

marliepanda

trailingspouse wrote: »

The bulk of my income is from dividends, as OH and I run our own limited company. We had to provide 2 years' audited accounts, but other than that the dividend thing wasn't an issue. That was Nationwide 3 years ago.

It's my OH, not me (hence my utter lack of knowledge!)

His business has only recently taken off due to staffing restructures and some new big clients so I'm not sure his past two years accounts will be very helpful, it's only really the last year that things have taken off, though it's only got better and better.

So I'm guessing from the comments above that dividends aren't going to be counted as hell only have had that income for one year and not two... that may mean we have to apply on salary only (in itself not a huge issue, just removes that breathing room...)
Thank you

ACG

Some lenders will work off PAYE + net profit, which can work out to be more than PAYE + Divs, although most will average them out over the last 2-3 years income. There are lenders who will work off the latest years only, but I doubt you will get 5x latest income. You may get 6x an average.

Its a case of seeing which works out the most depending on what the lenders will accept and what the affordability calculators throw up.

Speaking to one bank will limit you to just their products.

marliepanda

ACG wrote: »

Some lenders will work off PAYE + net profit, which can work out to be more than PAYE + Divs, although most will average them out over the last 2-3 years income. There are lenders who will work off the latest years only, but I doubt you will get 5x latest income. You may get 6x an average.

Its a case of seeing which works out the most depending on what the lenders will accept and what the affordability calculators throw up.

Speaking to one bank will limit you to just their products.

4x PAYE plus latest dividends would be perfect for us. Ive only been messing about with various online calculators, most didnt have options for 'dividends' and mostly just had options for overtime, bonuses etc.

Boyfriends company went through restructure so net profit would be a nogo. His dividends 2 years ago were £0, this year its been about £6k, but he has been able to div a steady £1k a month for a good while now (and looking forward he has contracts in place that will sustain that level of dividends)

Ideally we'd love a 4x mortgage based on the 1k a month dividend, plus his PAYE and my PAYE... (or a 5/6x one based on the average if thats how it would work)

I think a visit to a broker will be a must for us, seen some good deals from YBS and Santander but I'm pretty clueless generally, AND I havent been able to say dividends, just 'bonuses/overtime'

steeeb

Some will use the figure on the SA302 ie. the dividends + the 10% tax that was paid on it via the company i get paid the same way and could lend more than i thought.

We're lending (salary + divs) * 5.5 as an estimate - only as a single income, it might be more like 4 if theres 2 of you or something, depending on lender.

Id definateky see an all of market local broker.

ACG

When I say latest years figures, what I mean is that self employed people file their accounts annually (usually april to april), it is not based on the last rolling 12 months.

Personally I would forget the lenders and rates for the time being, it is important to work out what incomes were declared to the tax man and in turn what figures can be used for an application. At that point you can find out how much is achievable and at that point you can work out which lenders and rates are available.

I think seeing a broker sooner rather than later is probably going to help you, as you will know then how much you can lend and how much it will cost.

marliepanda

Thanks ACG. You've been really helpful. I'm booking an spot to go see one, my head is spinning a bit!

I'm trying to read up on the help to buy mortgage assistance. Half the things I read seem to tell me that it ended in December for older properties and half seems to say it extended until 2020? Which is it?

amnblog

The Help to Buy Scheme for older properties has ended.

Only the Equity Loan scheme for new build property is still in operation.

kingstreet

... and just to confuse things, we still have Help To Buy ISA and Help To Buy Shared Ownership.

Incredible foot in mouth moment tagging everything "HTB."