Mortgages for the self-employed – limited company

There are several ways lenders will assess limited company directors’ income, which differs from the way sole traders income is assessed. At Aspire we have helped my limited company directors and shareholders with their mortgages and our experienced advisors will find the best lender for you according to your circumstances.

If you are on the payroll of a limited company and you own at least 20%/25% of the company you will be classed as self-employed rather than as an employee. The ownership percentage varies from lender to lender so you should check with your broker first.

Lenders requirements will vary, but if you are a limited company shareholder and director lenders will use various methods in their assessment. Here are examples:

• Average of 2 or 3-years’ salary plus dividends.
• Average of 2 or 3-years’ salary plus share of net profit before tax
• Latest year salary plus share of net profit after tax
• Latest year salary plus dividends
After taking an in-depth look at your company finances, we will identify the most appropriate lender to match you circumstances, optimising your potential for the mortgage loan.

Prospective lenders will ask for your accountants’ details and their level of qualification. They will then ask for two or three years of completed accounts along with your personal tax calculation, previously known as SA302s. Depending on how your business and income has grown they may look at just the latest year or take an average of two years’ turnover. However, if turnover is down, they will use the latest year and if you have made a loss in that year it is likely your application will be declined.

What next?

If, as a self-employed person, you find the process too intimidating or are simply too busy to look into all the various requirements yourself, contact me at Aspire Financial Services for friendly advice by booking a free 30-minute introductory call.

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