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Aldermore remortgage declined - incorrect information
lulabelle81
Posts: 15 Forumite
Aldermore have just declined our re-mortgage application, after valuation survey, stating that my husbands business is insolvent.
After a huge panic, we have discussed with his accountant who states they are not.
To give you some background, my husband has been self employed for 10 years, but became the Director of a limited company (50/50) in September 2015.
We submitted our application to Aldermore with 2 years of accounts to support it, along with his personal tax return.
Our account manager at Aldermore, says that the Underwriter claims the company was insolvent in the recent year, caused by a reduction in turnover due to the loss of a contract and due to this they aren't able to rationalise that the income will be sustainable through the mortgage term.
My husband has drawn a PAYE wage, plus dividends, and this is detailed on his HMRC SA302 with an average annual wage of £40k.
The company has £15k fixed assets and £60k cash in hand. With retained reserves of £15k.
We think they may be misinterpreting two figures on the accounts. a) retained profit which is showing in the most recent year as being (£9285) but YTD is the £15k
b) Current Liabilities £65k, of which £58k is Directors Loan Account.
Year one Turnover £200k with £130k gross profit
year Two Turnover £125k with £73k gross profit
The accountant had to complete a Certificate and he has commented on the variation of year one/two as follows
"The first year trading was very good but client lost a large contract and so 2nd year was down but 2018 looking better"
This is technically incorrect as they didn't 'lose' a contract, they just didn't have so much work, a more accurate description would have been to say that year one was abnormally busy - the abnomally if you like, compared to the previous 10 years in the same trade. I am furious with the Accountant for writing this, and also not sending us a copy prior to returning to the underwriter!
We own our property outright, and were looking to remortgage £250k against its value of £380k. Combined income of £72k. We also have a healthy account balance of £10k plus endowments to the value of £25k that mature in 3 years. The remortgage is to pay back parents who purchased with cash so that we could renovate before moving in - we then sold our house and paid off our old mortgage - 4 years ago.
We initially applied to HSBC after a chance conversation in branch, and after a 16 week wait, we were declined over the phone with no specific reason cited except that we didn't meet their lending criteria.
Upon reviewing Experian, I have a couple of late payments on a Store Card from 2 years ago. After a conversation with a friend who is a broker, they advised Aldermore, they gave us a DIP same day as our initial phone call and we did full application the next day. The Valuation happened 7 days later, and now here we are!
My question is - can we appeal this decision?
After a huge panic, we have discussed with his accountant who states they are not.
To give you some background, my husband has been self employed for 10 years, but became the Director of a limited company (50/50) in September 2015.
We submitted our application to Aldermore with 2 years of accounts to support it, along with his personal tax return.
Our account manager at Aldermore, says that the Underwriter claims the company was insolvent in the recent year, caused by a reduction in turnover due to the loss of a contract and due to this they aren't able to rationalise that the income will be sustainable through the mortgage term.
My husband has drawn a PAYE wage, plus dividends, and this is detailed on his HMRC SA302 with an average annual wage of £40k.
The company has £15k fixed assets and £60k cash in hand. With retained reserves of £15k.
We think they may be misinterpreting two figures on the accounts. a) retained profit which is showing in the most recent year as being (£9285) but YTD is the £15k
b) Current Liabilities £65k, of which £58k is Directors Loan Account.
Year one Turnover £200k with £130k gross profit
year Two Turnover £125k with £73k gross profit
The accountant had to complete a Certificate and he has commented on the variation of year one/two as follows
"The first year trading was very good but client lost a large contract and so 2nd year was down but 2018 looking better"
This is technically incorrect as they didn't 'lose' a contract, they just didn't have so much work, a more accurate description would have been to say that year one was abnormally busy - the abnomally if you like, compared to the previous 10 years in the same trade. I am furious with the Accountant for writing this, and also not sending us a copy prior to returning to the underwriter!
We own our property outright, and were looking to remortgage £250k against its value of £380k. Combined income of £72k. We also have a healthy account balance of £10k plus endowments to the value of £25k that mature in 3 years. The remortgage is to pay back parents who purchased with cash so that we could renovate before moving in - we then sold our house and paid off our old mortgage - 4 years ago.
We initially applied to HSBC after a chance conversation in branch, and after a 16 week wait, we were declined over the phone with no specific reason cited except that we didn't meet their lending criteria.
Upon reviewing Experian, I have a couple of late payments on a Store Card from 2 years ago. After a conversation with a friend who is a broker, they advised Aldermore, they gave us a DIP same day as our initial phone call and we did full application the next day. The Valuation happened 7 days later, and now here we are!
My question is - can we appeal this decision?
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Comments
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What are the fixed assets?0
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Gross profit means different things to different people so to be clear the £73k 'gross profit' is after all deductions but before tax?0
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Obviously don't have the benefit of seeing the full accounts but it's not a particularly healthy looking balance sheet and, based on the limited information, it is the directors loan keeping the company afloat.0
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Obviously don't have the benefit of seeing the full accounts but it's not a particularly healthy looking balance sheet and, based on the limited information, it is the directors loan keeping the company afloat.
Really? We've had 2 separate accountants look over it (I got a second opinion to be sure) and neither suggested any cause for concern.
Year 3 is looking about half way between 1 and 2.0 -
How much did your husband pay himself in dividends in each year?0
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Sorry for all the questions but did he actually draw the dividends or is that what the directors loan is in respect of? If he drew them what does the DLA relate to?0
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Sorry for all the questions but did he actually draw the dividends or is that what the directors loan is in respect of? If he drew them what does the DLA relate to?
They left £25k in the company as retained earnings after year 1 for tax efficiency.
He has been drawing a set amount each month since 6 months in, and the accountant advises me that this is allocated from both dividend and the DLA paying him back, if that makes sense?0
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