New company accounts question for mortgage please help!!!

Anxiousannie

Good evening everyone

Me and my husband are stressing out with our mortgage application with Kent Reliance (We have 3 small defaults that are all under £180 And over 3 and half years old)

My husband has his own Ltd company to which we are both shareholders.

The lender wanted our latest accounts before making a decision as they wanted to see that the company was slowly increasing in profit.
Now I'm absolutely panicking as have had the draft copies.
Annual turnover is 20k more from last year and the gross profit is about 20k more too... now this is all ok but we took more salary last year so the net profit is 11k less than it was last year.

Please can someone shed some light as to whether it's net profit the mortgage lender will be looking at? We feel sick with nerves
MA said they look good but I just panic as the net profit is less this year!


Thank you so much for reading this

Annie xx

LRmortgage

They will be able to see from your personal tax calculations and the accounts that you took bigger salaries.

Anxiousannie

Thank you so much for taking the time to reply!

Do you think they will see this and be ok... obviously I know you can't say for definate but do you think they'd be ok with this?

Our combined income this year was £62k split between dividends and salary. Last year was £40k combined

Again thank you for taking time to reply

Annie

Rick_Albright

Save your time, use this method.

https://forums.moneysavingexpert.com/discussion/comment/74487668#Comment_74487668

You can thank me later

Anxiousannie

LRmortgage wrote: »

They will be able to see from your personal tax calculations and the accounts that you took bigger salaries.

Thank you but we've been advised against doing this. They can still look into the company and see my husband was a director.

Also it's too late now! We're in the process of getting the mortgage offer. Well hopefully anyway

haras_nosirrah

Rick_Albright wrote: »

Save your time, use this method.

https://forums.moneysavingexpert.com/discussion/comment/74487668#Comment_74487668

You can thank me later

why do you keep posting this - it is incredibly bad advice and doesn't need to be followed

LRmortgage

Please ignore Rick and his method.
Kent Reliance are a decent Lender, especially where there is an issue or two. That’s why their rates are a little higher.
I obviously cant guarantee anything but they know how to read accounts and tax calculations and should be able to see that your income has increased.

Are you going through a Broker? If so and I was your Broker I would have put an explanation in the notes box at the end of the application to make it obvious to the underwriter.

Anxiousannie

Thank you for replying!! I honestly feel better just needed a little bit of encouragement. I know you can't guarantee but were at our wits end now.
Yes we are going through a broker. The problem we had was because we paid ourselves more money in salary than dividends as we are currently renting and the letting agents wanted 3 months bank statements for when we first applied and we were on 11k each a year with dividends every quarter and they weren't happy with this as our rent is £1600 So we ended up paying a years rent in advance! Anyway, so we wanted to make sure after the first year we would be seen to be paying ourselves more wage enough to cover monthly payments.
Kent Reliance werent sure about this and at the start of the month wanted us to wait until our latest accounts were in. They wanted to see a rise in the company I presume profits and also my dividends to make it affordable for the mortgage. We need to be earning 56k combined to get a 247,000 mortgage and this year's accounts salary plus dividends are 62k

We also have a friend of my hubby cousin who has managed to get an AIP with Chorley BS today for a better rate but they want an accountants projection for my wages next year... honestly our accountant has gone above and beyond for us we just don't feel like we have the nerve to ask him this!!!

So so hard we are like zombies at the minute which is why this site helps so much!!

Thank so much for taking the time to reply!

Annie

LRmortgage

Have trust in your broker to manage this for you. It’s what we do day in and day out.
If it’s a no with Kent, then the Broker might have other options up his sleave.
To add a little caution, it’s not a good idea to have more than one application going at a time. So be careful if you are also applying to Chorley.

Thrugelmir

Underwriters will extract the information they require from the annual accounts. The underlying trading performance and cash flow of the business being key. Declared remuneration and dividends in the accounts can differ to when they are actually paid.

Little point in second guessing what the lenders key criteria is.

Anxiousannie

Sorry no we aren't applying with Chorley we decided we should carry on with Kent Reliance and if they say no our broker has kensington lined up.

I got the figures wrong we made an extra 35k from last year's turnover and gross profits. So this is def promising.
Our broker has said they have a 4 day turnaround to underwrite so I'm praying by Friday we will know.

We are actually out of contract with our rental agreement but don't want to sign if we can move out. The letting agency are on our case to sign though. Obviously we haven't told them we are hoping to move out incase mortgage gets refused!!!!!:cool: