The Mortgage Mum - Mortgages for owners of Limited Companies
Mortgages for owners of Limited Companies – 7 tips you need to know to get the most out of your mortgage!
1. The figures we will base your income on! We will need your last 2 years SA302 / tax year calculation and tax year overview document! From here, we will be looking at an average of your salary and dividends.
2. Some lenders will allow us to use salary and net profit if you are a growing business! This has worked well for a few customers of mine recently who were otherwise struggling to borrow what they know they can afford!
3. If you only have 1 year of accounts we can still help! I have found some lenders who will only require 1 years’ worth of accounts, but you need to have been trading for a minimum period of 12 months.
4. Reducing income can be a problem! If your latest year’s accounts are less than previous years this could cause an issue unless there is a suitable reason for this. Lenders like to see steady or increasing accounts to ensure that business is thriving and they feel comfortable to lend. If they see accounts going down it is an area of concern for them!
5. Prepare for the mortgage 2 years in advance! Work backwards! If you have a remortgage due in 5 years for example, make sure you look at your accounts for the 2 years leading up to it. Many owners of Limited Companies are tempted to put in more expenses to reduce their Corporation Tax bill but this could impact on your borrowing potential if you are looking to move house or borrow more. Speak to us 2 years before so you know what you and your business needs to be earning to borrow what you’d like to.
6. Don’t be too tempted to reduce your tax bill! It could cost you when it comes to applying for your mortgage. Be mindful of your balance sheet! We are interested in looking at your assets vs. your liabilities and the difference between these. If you owe more than you have this could become an issue for a mortgage lender.
7. If you are employing your partner in the business please ensure that your payslips and your bank statements match. We have had incidents recently where the partner is paid weekly but the payslips are issued monthly. Lenders will want to see both, so this can cause real issues if they don’t match!
You can contact The Mortgage Mum on her website www.themortgagemum.co.uk or on her social pages. Get in touch today if you have a mortgage enquiry or if you think you may be interested in becoming a Mortgage Mum yourself!