Mortgage status: Employed plus significant control in other company

acakayak

Dear, I would like to buy home together with my wife. We would be buying home to live in it, and it would be our first home.

Here comes potentially hard part to explain, so I will write in bullet points to make it easier to follow:

- I am the owner / director of two companies. This definitely makes me count as company director when approaching bank, this part is clear.
- My wife is employed in one of my companies, let's call it company A. She has nothing to do with other company (Company , so her status at the moment is also clear for mortgage - she is regarded as employed.

My question: Since company B has profits which I would like to pay out as dividend and use that money as deposit, can I add my wife to ownership structure of company B and would she still be considered as employee of company A if she gets dividend, but has no employment with company B?

I saw that in order to be considered as employed, you should have less than 20-25% ownership in company, however here we are talking about different companies, so can she basically apply to mortgage as employed in one company while she is investor  of 50% in another company and still be regarded (get easier mortgage, with 3 months proof of payslips) as employee instead of being in "harder mortgage band" like me (Director)?

Thank you!

ACG

It is not quite as simple as you say. 
Some lenders would treat her like an owner as you are married. 

Theoretically what you say is correct, but dont be surprised if a lender picks up on it and delves deeper. This is one of those things I would be running by the lender before applying. 

acakayak

Edit: the reason why there is smiley with sunglasses is because I guess that I made formatting when writing Company B which system recognised as smiley. Sorry about this. 

So company A - I am owner and director, wife is employed

Company B - I am owner at the moment, but would like to put wife as 50% owner and she would continue working for Company A. 

acakayak

ACG said:

It is not quite as simple as you say. 
Some lenders would treat her like an owner as you are married. 

Theoretically what you say is correct, but dont be surprised if a lender picks up on it and delves deeper. This is one of those things I would be running by the lender before applying. 

Hi ACG, thank you for incredibly quick answer!

Well, the potential problem is that we would like to apply for mortgage in a year from now, since we still need time to make enough money and pay out dividends.

Would there be any difference if we were to apply on her name only? I am well aware of potential complications if this turns out to be a problematic marriage (and I guess 50% of people end up there), but putting that aside, if she were to go to bank alone and try to obtain mortgage on her name, showing employment with one company and investment in / dividends from another, would that be ok?

ACG

The answer to all of the questions really is "it depends". 
Dont underestimate lenders, many do a companies house check as standard - even if you say you are employed. If they see Mrs Jones applying for a mortgage owned by a Mr Jones, it may raise additional questions. If you are also financially associated on your credit report then it basically confirms their suspicions. 

Sometimes you can over think things and cause more problems. There will likely be lenders (at normal rates) who will accept she is paid PAYE with a letter from the company accountant confirming the business can afford her wage. 

Your situation sounds like it can be flexible in order to get what you want which is helpful but may not be necessary. I think you need to speak to a broker and let them ask you a million and one questions, to get everything down on paper and come back with some suggestions on how to be best prepared. 

It could be complex, it could be very simple or anything in between but I dont think a forum like this is geared up for your sort of situation personally. Maybe one of the other brokers has a different thought process but I quite like to get everything down on paper.

[Deleted User]

Why does your wife needed to be added to company B in order for dividends to be paid out?  To save tax? 

acakayak

Deleted_User, yes, so we save more for downpayment (and in general, whatever the money is ultimately used for). No other reason to be honest.

ACG, thank you! Yes, we do have flexibility, that is the main reason why we are looking for best solution. I will try to find some more info from specialised professionals on this.