Mortgage Deposit Questions / Problem

jonnybinthemix

Hi All,

I wonder if I may ask for some advice.

We've put an offer in on a house with kind of a last minute situation, a new build. We have a mortgage in principle & have signed the reservation form with the builder.

Doing the sums, I'm going to need to withdraw some money from a ltd company which I own, and have just started contracting through in my spare time. I'm wondering what the best way to do this. My regular jobs pushes me over the higher tax bracket, so dividends would be taxable to the max.. and my broker says even if I take this route, the mortgage company would probably want me to do a tax return before they'd accept it as income(?).

In the past I was a full time ltd company contractor, and as such I know I can claim back dated business expenses. Since I have spent a chunk of money on POC stuff over the last 18 months (the business has been registered for 18 months, but never actively traded), I can legitimately claim the cost of the POC stuff...

The last piece of the puzzle is the £2k in tax free dividends, which I was going to use. But in order to do that would I need an accountants letter? I have not yet appointed an accountant since the operational running on the ltd company is incredibly straight forward (payment for services, no goods, fixed rate VAT).

Would the lender accept that a chunk of the money has come from an expenses claim from a company which I own and has only just started having money go through it's account?

Thanks

Sibbers123

No. Expenses are not income, they are reimbursement of expenses. When applying for a mortgage, you will need to provide your SA302 (tax computation) and tax year overview, probably for the last two years. 

jonnybinthemix

Sibbers123 said:

No. Expenses are not income, they are reimbursement of expenses. When applying for a mortgage, you will need to provide your SA302 (tax computation) and tax year overview, probably for the last two years. 

I won't have to prove income from the ltd company per se, as I have another job which I work full time (the ltd company is more of a side thing) - my salary from my main job is more than enough to prove affordability for the mortgage. I got the AIP based on that without the ltd company being anything to do with it. 

The ltd company only comes into play for a % of the deposit funds.

So, am I right in saying that if I have; let's say 70% of the deposit funds in a saving account (where I can evidence bank statements showing it's been there for years), and 30% of the deposit funds come in from reimbursement of 18 months back dated expenses.. then the lender shouldn't have a problem with it?

[Deleted User]

Depends on the underwriter and if the lender wants to see proof of deposit.  

I've seen things like this before where the underwriter has asked for accountants confirmation that the withdrawal from the business will not affect business performance.  That was years ago though 

It's one of those that I would have to ring round each lender I wanted to use to check they were happy with it.   Plenty lenders have rules about deposits from directors loans for example but I can't think of any that would have specific policy written on a website for this 

jonnybinthemix

Deleted_User said:

Depends on the underwriter and if the lender wants to see proof of deposit.  

I've seen things like this before where the underwriter has asked for accountants confirmation that the withdrawal from the business will not affect business performance.  That was years ago though 

It's one of those that I would have to ring round each lender I wanted to use to check they were happy with it.   Plenty lenders have rules about deposits from directors loans for example but I can't think of any that would have specific policy written on a website for this 

Thanks for the info, but as the bulk of the money is coming from reimbursed expenses & not dividends, would it still make as much of a difference? The lending criteria on the lenders intermediary website states the following:

For accounts within the UK, one full month's bank statement is required, showing the full cycle of transactions.

• It must be dated within 42 days from when the document is uploaded.
• There must be evidence of at least one month's worth of savings built up in the account.
• Any 3rd party or cash transactions of £10,000 or more may be queried. If the transaction is a gift, the UK gifts criteria will be followed.