"Self Employed" due to shareholding in company - despite salaried by Employer..help!!

[Deleted User]

Hi there
Haven't posted on here before but wanted to just see if anyone had answers.

We are in the process of a mortgage application with Metro Bank and have been for the last 30 days so far. The latest thing that they have flagged is that my partner is classed as Self Employed - simply because he is a Director with more than 25% shareholding. He does not take company dividends and he is salaried with a contract in place.

This would be fine but the company has only been around for 11 months and the lender has asked for 2 years proof of accounts. Obviously, they do not have these because of how long they have been registered. He has spoken to the accountant and they have suggested that they could reduce his shareholding OR provide projected accounts.

I am obviously worried about this as it is making me doubt the process now. Does anyone have any suggestions? If people have been in this position before? If the accountant provides proof that he has reduced shareholding, or if she provided projected accounts? Would this work?

Panic mode.

Thank you!

kingstreet

Presumably, you applied direct? It's common knowledge in the industry ownership of 25% of the business will see you treated as self-employed by pretty much the entire market so this is an unlikely broker error. I suspect Metro won't accept this case and it would be prudent to look for lenders happy to accept one year self-employed applications.

[Deleted User]

kingstreet said:

Presumably, you applied direct? It's common knowledge in the industry ownership of 25% of the business will see you treated as self-employed by pretty much the entire market so this is an unlikely broker error. I suspect Metro won't accept this case and it would be prudent to look for lenders happy to accept one year self-employed applications.

Hi there
No we applied with a broker (with a lot of experience) but he didn’t foresee them asking because he is Salaried. So even if he changes his shareholding, or obtains projected accounts they’ll say no? 

we can’t go with another lender. Too far down the line unfortunately and 90% LTV

dunstonh

The latest thing that they have flagged is that my partner is classed as Self Employed - simply because he is a Director with more than 25% shareholding. He does not take company dividends and he is salaried with a contract in place.

Yep. That is a common position when the shareholding is 25% or above.

This would be fine but the company has only been around for 11 months and the lender has asked for 2 years proof of accounts. Obviously, they do not have these because of how long they have been registered. He has spoken to the accountant and they have suggested that they could reduce his shareholding OR provide projected accounts.

It would be better to ask the lender what they want given the short history.

If the accountant provides proof that he has reduced shareholding, or if she provided projected accounts?

Reducing the shareholding means he owns less of the company.  So, misses out on future value and voting power.