Getting approved for a mortgage as a business owner.
If you own your own business or hold more than a 25% shareholding in a limited company you’ll be treated as self-employed from a mortgage lending point of view.
Getting a mortgage doesn’t need to be difficult but there are steps you need to take to ensure you and your business look appetizing to any perspective mortgage lender.
So where do you start?
-Speak with an experienced mortgage broker at the earliest opportunity.
-Get a qualified accountant on board they are worth their weight in gold!
Timing can be vital with self employed mortgages. You need the right advice at the right time, the earlier in the process the better. The sooner you speak to us the sooner we can put a plan in place that’s individual to you and your business to improve your mortgage chances.
You may think your accountant is doing a great job because you’ve paid minimal tax but this will likely hurt your chances of getting approved for your mortgage later down the line.
What are lenders looking at?
First off, lets get on thing straight. You may think your employed by your own company… (yes you are but as earlier mentioned from a mortgage point of view you are self employed).. so the payslips your accountant sends you aren’t worth the paper they’re written on. Therefore increasing your salary 3 months before you want to apply wont work!
This is the total amount of money that’s come in to the business over the tax year. The top line doesn’t matter too much, its what comes out the other end that counts… as long as there are no sharp increases, decreases or adverse trends. Lenders like to see bank statements 3 months prior to application to ensure there’s still a healthy level of income coming in to the account.
Most LTD company directors take a small salary below the tax freehold. That’s fine and nothing needs to change as long as there is a sufficient profit/dividend see below.
Dividends are taken by directors from the profits of the business. Lenders will either assess your income by combining your Salary & Dividends or Salary & Share of Net Profits. This is why speaking to us first is so important so we can confirm the level of income you need and then you can liaise with your accountant to structure your accounts correctly.
This is the most important figure on the books. Mortgage lenders like to see consistent levels of net profit. If there are sharp increases or declines in profit levels then this is where having a suitably qualified accountant comes in handy to explain the reasons behind these. Occasionally they may request a reference.
If you run your own business or own a share in a business and are looking for a mortgage broker then get in touch to see how we can help.
AL Mortgage Solutions LTD
0151 459 9826
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Self Employed Mortgages Liverpool
Liverpool Business Owners
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