Directors Mortgage using latest years net profit

[upandcoming]

Hi,

I was wondering if anyone has been in a similar situation to me regarding a mortgage as we are interested in upgrading our house later on this year. I understand that I need to see a specialist broker off the high street and I also need to speak with my accountant however this is the only time of day I am able to give this real thought and interested in any advice or help if possible...

Here goes..

My wife and I have a limited company coming up to 4 years old. Me 75%, wife 25%.

My salary £11000
The Wife £11000

The Wife's School job £12500

Paye total £34500.

No dividends voted.

Net Profit this year approx £60000. Year 4.

We have a 33% deposit of the houses we would like to go for.

Credit Scores - both good. All green circles, 2 credit cards repaid in full each month (used to maintain healthy credit only) No loans. No new accounts opened within last 6 months.

The company made profits in years 1 + 2, year 3 made a small loss (great year + 50% increase however we invested lots in the continual growth).

This is the reason we want to try and get a mortgage on the latest years net profit if possible rather than an average of last 2-3 years net profits...

Is this possible or am I dreaming?
Does anyone know the likely multiples on what we would be offered?

Would I be better off being sole director with 100% if wife's earnings not taken into consideration? (She does not work in company - we took advice when setting company up).


Thank you for reading thus far. Any pointers would be most grateful.

Thank you

 

[john1989]

@tony84

 

[tony84]

There is only one lender I know of who will use latest years incomes plus net profit and they are an absolute ball ache. They would lend around 4x PAYE + Nt profit. I am assuming they would accept 100% of the second job but not 100% sure.

There could be other options, ie a lender who would normally take the last 2 years but maybe working with the latest figures only or an average excluding the investments you made as you do have a good deposit.

You need to sit down with a broker as there will be a lot of leg work if you want a lender that charges normal rates and/or will not make you want to pull your hair out everytime they come back to you.

 

[upandcoming]

Many thanks Tony for taking the time to read and respond.

I shall take your advice on board. And delve into this a little further.

If you don't mind I'll pm you over the weekend.

It does seem so many hoops need to be jumped through as a company owner. I have trained two of my staff from scratch, watched them thrive and get mortgages and live in nicer houses than me and I'm the one working 70 hour weeks with all the headaches! The harsh reality is that if the business took a downturn, 9 employees will lose there jobs before me as the last man standing!

If I got a job for someone else, I'd be in a strong position to apply for a mortgage in a few months....

Still, a challenge is a challenge. I do hope something is done in the near future to help small business owners a bit more.

Thanks again guys.

 

[Energise Accounting]

We got a Mortgage with Halifax when i first went self employed with 1 years accounts. Although we did have a 40% deposit

 

[tony84]

There are plenty of options of 1 years income. Its just that there are not so many when it comes to wanting to use net profits instead of dividends.

I can not see lenders dropping below that to be honest, mainly because the FCA have said they expect lenders to be able to evidence income...so self certs are not coming back anytime soon, apart from through lenders who operate outside the UK.

As Energise accountaing says, Halifax accept 1 years accounts if you have a 25% deposit and fly through the credit score. Although they do reserve the right to ask for more.

 

[Energise Accounting]

I must also add i do run my business as a sole trader

 

[upandcoming]

Thanks again.

Is my request similar to a self certification mortgage? I was under the impression the self certification mortgages were for those unable to verify their income and provide supporting evidence.

I am able to supply wage slips to support our salaried pay. I am able to provide certified accounts. I am able to provide both personal and business bank statements. If my company makes a profit then it is there for us to take the winnings therefore that is our joint earning power?

We could take a dividend of 60k to 'up' our income to suit the mortgage lenders criteria but we would rather leave the money in the company as a safety net should a quiet period arise in the future. That makes us responsible right??

There must be a way.

Thanks again for your advice. I guess we will have to take the dividend to play the game!