What’s my best employment option for a mortgage

crispy99

Yes it’s a challenging world and the more I look at mortgages the more I feel it’s never going to happen for me. 

I am a company Director of an events company on PAYE currently earning £12500, The company does have good profits and I’ve spoke to my accountant about taking dividends to obtain a mortgage but these self employed mortgages will take an average of 2/3 years, it’s just working out too much in tax! 

So here’s my other option... I own half another LTD company but not on paper, not even on PAYE, the company turns over about 250k and profit of around 100k. Would it be possible to be put on PAYE for 80k a year, company deducts my tax from wages and pays into my personal account for around 3 months and then apply for a mortgage? 

I know this may be frowned upon but it’s all about saving money right? 

PAYE is more expensive than the dividends, but dividends are paid after corporation tax and even then it will take a year or 2 to average out a decent earning as self employed!

spoke to my accountant he said this wouldn’t work because a mortgage company work ask for a p60 but from what I’ve read some just ask for 3 months payslips and bank statements. I know it sounds dodgy but surely people could go and find a job for 80k a year and then decide they want a mortgage?

I hope you guys can understand I can afford a mortgage this size but for the last few years we’ve always grown the companies with the money instead of paying ourselves. 

Any advice would be appreciated 

K_S

@crispy99 I understand where you're coming from but twisting yourself in knots to "fit the criteria" is both unnecessary and something the underwriters will be looking out for.

If your company/companies are profitable, have at least 1-2 years accounts, haven't been significantly impacted by Covid and are retaining earnings rather than distributing them, there are lenders who will consider lending to you on that basis. With all due respect to your accountant, he may not be the best person to take targeted mortgage advice from.

crispy99

K_S said:

@crispy99 I understand where you're coming from but twisting yourself in knots to "fit the criteria" is both unnecessary and something the underwriters will be looking out for.

If your company/companies are profitable, have at least 1-2 years accounts, haven't been significantly impacted by Covid and are retaining earnings rather than distributing them, there are lenders who will consider lending to you on that basis. With all due respect to your accountant, he may not be the best person to take targeted mortgage advice from.

K_S said:

@crispy99 I understand where you're coming from but twisting yourself in knots to "fit the criteria" is both unnecessary and something the underwriters will be looking out for.

If your company/companies are profitable, have at least 1-2 years accounts, haven't been significantly impacted by Covid and are retaining earnings rather than distributing them, there are lenders who will consider lending to you on that basis. With all due respect to your accountant, he may not be the best person to take targeted mortgage advice from.

Hey, thanks for replying. Probally not me being completely clear. The company’s do make great profit but it’s used buying new stock to grow so annual returns are still low on showing profit. Honestly we don’t have to spend so much and we are at a point where we don’t need anything else and the company could either show 100k plus profit next year. I know what your talking about using retained profit but I just feel if I declare that rather than spend it, it’s 19k on corporation tax. Or I could just pay 2k a month on PAYE tax until I get a mortgage.. realistically could that work?

K_S

@crispy99 If you own more than 20% of the company, most lenders will treat you as self employed irrespective of whether your main drawings are in the form of a salary or dividends or both. So even if you only recently started paying yourself a salary, they will still need a track record of at least one year's accounts that reflect it. They won't treat you like they would a PAYE employee. I hope that makes sense.

[Deleted User]

If you own more than a certain % of shares in a company then you are underwritten as self employed regardless of it being paye income only.

You would have to be willing to deal with the consequences but if you got a particularly stupid broker and a lender ignoring all their internal and external checks then it is possible to twist the truth to present a false view of your financial position. 

fraud

noun

1. wrongful or criminal deception intended to result in financial or personal gain.
   

getmore4less

When you get your £400k mortgage how are you going to pay it on £12k a year?
Your £80k salary will cost the company(you) more than £2kpm in taxes.