How scary do I look to Mortgage lenders

Ballal

I have been a company sole director since 2014. I am not a shareholder in the company though!

In March 2021 I signed a management agreement with the shareholders and salaried myself as a Managing Director on a PAYE basis (£62k pa). I wias planning for getting a mortgage when opportunity arise. last month I resign from the company director. Now been offered a shared ownership (35%) property for a mortgage of £150k (10% deposit).

The broker representing the housing association looked at my bona fide and told me that lenders will treat my application as a self employed given the recent resignation as director and hence will require :

1- Latest 3 years accounts:

Here: Turnover/Profit (loss) for the last 3 years was declared as

2021: 3330k/(£135k),

2020: £125k/ £1740

2019: £125k/£1600

2- Latest 3 years tax assessments & Latest 3 years tax year overviews:

I honestly did not know I had to do these. When got in touch with accountant her replied he will prepare them but then I read online that I have to pay any tax declared on them before lenders will consider them. If this is the case I would want to pay as little as possible for arrears

Obviously April 2021/2022 I have a P60.

Latest 3 months business bank accounts showing income coming into the company.

Accountant did not want to share details of bank account and offered only Account Summary statements since I am no longer a company Director.

Do I stand a chance to be considered for a mortgage you think?

ACG

The loss will be a problem with a lot of lenders. 

There are people who have done what you have done solely for the purposes of getting a mortgage and then once they have the mortgage will become shareholders again. That is in its strictest sense mortgage fraud. I am not suggesting your are doing that but as a broker I would not take your case on, its not worth me risking my license. 

You are unlikely to have the pick of lenders but I reckon there will be options. 

Ballal

Thank you for your input. My broker has today confirmed that with the loss she will not be able to obtain a deal. 
Its worth mentioning that I was not a shareholder in the company. I was only a Director.
How long usually it takes before the resignation is no longer considered? a year, two?  

ACG

I was going to say if you have never been a shareholder find a new broker because it should be fine. 
But having just looked at the figures properly, I think there is probably a little more to this - you are a relative/partner of the owner I am guessing. 

A business has a turnover of £125-350k. 
Profit is a grand or 2 followed by a £100k loss. 

Its not normal for a business to pay someone £60k and only make a grand or 2 profit.

I think you need a broker to sit down and understand everything. But experience would tell me you are very closely linked to the owner and there will be a concern from an underwriter you are the technically the owner ever if not on paper. 

Ballal

You are right! I think I need a broker to understand everything.
The company is essentially managing an account in Europe for an overseas company (The shareholders). No relation to the shareholders or the new director. Prior to 2020 my pay was a commission of the sales. During renewal of main clients contracts a compliance clause needed to be satisfied where the signatory is an employee of the company and has to file evidence of employment contract which we did just that. In Jan 2021 I signed a Management agreement with the shareholders. The accountant at the time recommended PAYE route for perks example given pension contribution, paid tax and regular pay. The net remained more or less similar.   

ACG

Ah, fair enough. So its good that there is not a family link there. 
I think a decent broker would be able to sort this. 

I am not touting for the business as we are chocca now until the end of the month so not taking on new cases at the moment, but where I said earlier that I would not take this on, it sounds like a different case to what I assumed it would be. 

You probably do need someone experienced and I would also explain the business as I think a lot of brokers (if anything like me (sorry)) will just assume the worst - but that is because we see it all the time.