Deposit from dividend

VeeP

Hi,

Am currently looking into a mortgage in my wife's name. She has a 20% shareholding in a company which she is a director of. Due to the % of shareholding, many lenders treat her as employed if she only wants to use her PAYE salary as income.

However, we had intended to potentially purchase the new property before our sale completes, therefore were planning to take a bonus as a dividend in order to cover the new deposit.

I have been told by a broker that if we want to use a dividend for the deposit, that we will then have to be treated as self-employed.

I'm wondering if anyone knows if this is all lenders or just the one we are currently looking at (TSB).

Please can you share your views?

Thanks

sal_III

You are getting your terms mixed up. Is she taking a bonus to her salary as an employee/director of the company or is she taking a dividend as a 20% shareholder? There is a world of difference between the two.

If you are only planning to use the extra money for the deposit and not relying on regular dividend payouts for affordability, you don't have to treat her as a self employed.

amnblog

It sounds like the borrower here meets affordability on PAYE only.

As stated, if dividends are being used for affordability that would be on a self employed basis.

Lenders can be cagey about allowing dividends as deposit particularly where the borrower is trying to use those same dividends to prove affordability.