Change from Partnership to Ltd Co

philng

My daughter & son in law have owned a business for 3 years and have 3 years accounts. The business has been in the family for over 40 years. They have just changed to Ltd co with both 50/50 Owners. Previously my daughter was an employee now a Co Director.

They seem to be having issues renewing their Mortgage due to the recent change in Co structure. 

Their existing mortgage taken out 2 years ago has myself on it as Joint Mortgage Sole Proprietor as they had only 1 years accounts when they took mortgage out but this restricted the term to 18 years in line with my age 75.

They now wish to remove me so they can extend the term as they have plenty of income to have mortgage in their own right.

What are chances existing Lender through Underwriters will approve as initially they were told they need 2 years Ltd Co accounts?

dunstonh

They seem to be having issues renewing their Mortgage due to the recent change in Co structure. 

I changed from partnership to limited company a year before I applied for a mortgage and the lender treated it as a continuation when looking at the figures.  i.e. two years of partnership and one year of limited.     In our case, the company name remained the same. It just had Limited added to the end so it was a clear continuation.

What are chances existing Lender through Underwriters will approve as initially they were told they need 2 years Ltd Co accounts?

With the right lender, it shouldn't be an issue.

MWT

dunstonh said:

I changed from partnership to limited company a year before I applied for a mortgage and the lender treated it as a continuation when looking at the figures.

I wonder if this is the difference though...

philng said:

They have just changed to Ltd co with both 50/50 Owners. Previously my daughter was an employee now a Co Director.

Going from partner to director is essentially 'no change', going from employee to director may be the problem?

As ever, the answer is probably a good broker...

ACG

I echo Dunston. 
It is definitely not going to be for every lender. But there are a few who will consider it where the change was for tax purposes. 

philng

ACG said:

I echo Dunston. 
It is definitely not going to be for every lender. But there are a few who will consider it where the change was for tax purposes. 

Are you able to let me know which lenders may look at? Additional complication i believe is the business was a sole trader before with my daughter as an employee and is now a Ltd co with my daughter and son in law 50/50 ownership. They have an ltv of just 64% and total income of around £90k on a £255k mortgage.

ACG

philng said:

ACG said:

I echo Dunston. 
It is definitely not going to be for every lender. But there are a few who will consider it where the change was for tax purposes. 

Are you able to let me know which lenders may look at? Additional complication i believe is the business was a sole trader before with my daughter as an employee and is now a Ltd co with my daughter and son in law 50/50 ownership. They have an ltv of just 64% and total income of around £90k on a £255k mortgage.

That will make it trickier as there is now a change of ownership.
I think you might need to wait until you have one years accounts as a ltd company, although there might be a lender who will take a view. 

I cant really think of any lenders off the top of my head. But the devil is in the detail, there could also be other issues you have not mentioned/considered so I am always reluctant to name lenders on here anyway - but as I say this isnt a case of wont, I genuinely cant. Its one of those where I think you need a broker and they need to go and do some research. 

philng

Looks like their existing Lender may be able to look at it having referred to an under writer today. They maybe prepared to allow last 2 years sole trader income and last year p60 for my daughter. Will know more tomorrow.