First time buyer - complicated proof of income question

firsttimebuyer29rp

Hi, 

My partner & I are looking to buy a house next year, however I think my income is going to make this difficult

I was being paid standard salary up until a few months ago when I moved to 80% of my wages being paid through dividends

I understand getting paid via dividends requires 2 years books, which would mean us waiting effectively 2 years 

Does anyone know if I were to switch to being paid fully in standard PAYE/salary, would the previous dividend months be ignored/irrelevant and they would only look at last 3 months pay slips and bank statements (which would all be at the salary rate)

Is there any way of them seeing I've only been on PAYE/salary for the few months before submitting these documents? If so, will they care?

Being told different things by different advisors

Hoenir

Whether you pay yourself through the payroll or via dividends. The income is being generated through the same source i.e. a trading limited company. A lender will wish to see that the business is trading at a level to sustainably support what you are drawing out as remuneration. 

DullGreyGuy

firsttimebuyer29rp said:

Hi, 

My partner & I are looking to buy a house next year, however I think my income is going to make this difficult

I was being paid standard salary up until a few months ago when I moved to 80% of my wages being paid through dividends

I understand getting paid via dividends requires 2 years books, which would mean us waiting effectively 2 years 

Does anyone know if I were to switch to being paid fully in standard PAYE/salary, would the previous dividend months be ignored/irrelevant and they would only look at last 3 months pay slips and bank statements (which would all be at the salary rate)

Is there any way of them seeing I've only been on PAYE/salary for the few months before submitting these documents? If so, will they care?

Being told different things by different advisors

So you are the director and shareholder of a company? Banks will treat you similar to a self employed person irrespective if you are taking money as salary or dividends. 

Are you a contractor or some other form of business? If you are some banks just base it on your day rate rather than the company P&L and your drawings. 

ReadingTim

Suspect the only person who really knows is the lender, and they may not make the precise details of their determinations public for fear of people gaming their criteria.  Different lenders may have different requirements, so there unlikely to be a single hard and fast rule.  

Suspect you will need to engage a broker who specialises in mortgages for the self employed, who will be able to advise on the best lender to apply to based on the evidence you can provide.  But regardless of whether you're an owner or merely an employee of a business, the lender will want to satisfy themselves that the business has enough of a track record to ensure that it can keep paying you, so that you can keep repaying the lender.  If the business is relatively new, this might be an issue, however it pays you.  

firsttimebuyer29rp

Hi, sorry I should’ve explained my position in the company better. I am a director on Companies House and own 15% of the company. 

Thank you for taking the time to reply!