Mortgage for Complex Shareholding

Will having more than one business make it harder to get a mortgage?

It won’t make it harder at all from a lender’s point of view. They will assess the income from both businesses in the same way.

It will be more work for you as the applicant, though, because it will mean more documentation and more admin. You’ve got to prove the income from all companies to use it towards your mortgage.

What documents do I need to get ready before we start?

You’ll need to prove your ID with a driving licence or passport, and you’ll need your bank statements for all of the business plus your personal accounts.

On top of that, you’ll need to prove your personal earnings as submitted to HMRC – via your tax year overviews and tax calculation documents. You’ll also need your fully filed limited company accounts for the most recent year.

Will my personal credit history matter as much as my company accounts?

Yes, it will. Even though lenders are using the income generated from your business, if you’ve got poor credit, some won’t be able to help you.

We might use a lender who specialises in accepting people with impaired credit or missed payments. There are many lenders out there, so this is where a broker really comes in handy.

Can we apply based on my latest year’s income if it’s higher than before?

Yes, you can, but not all lenders can help. Most will need you to have at least a two-year track record, and they either average the last two years or use the latest, if lower.

Only a handful will accept the latest year in isolation, as it’s a slightly higher risk for the lender.

How long does it usually take to get approved with this kind of setup?

There are two levels of approval. If you’ve got all your documentation ready and send it to your mortgage broker, you’ll usually have a Mortgage in Principle within two or three days.

That initial approval can be done relatively quickly and gives you confidence when remortgaging or making an offer on a new property.

With a full mortgage application, it depends how complicated things are, but on average, it takes about two to three weeks for the full mortgage offer to be issued.

How can a mortgage broker help? Is there anything else to add?

For self-employed people and complex shareholdings, it’s a huge help to have a broker on your side.

Choosing the right bank is not easy – not every lender deals with this type of income and how you’re paid, especially with limited company directors who own multiple businesses. Speaking to an experienced broker puts you in a far stronger position and saves you wasting time talking to several different lenders, only to find they can’t help.

Key Takeaways:

• You generally don’t need to own more than 50% of the company. In most cases, owning 25% or more is sufficient for lenders to consider you self-employed and review your company income.
• Lenders can assess affordability by either looking at the salary and dividends you take, or your salary plus your share of the business’ net profit, with a few lenders accepting retained profits.
• Most business owners’ incomes fluctuate, which is acceptable. If your income has dropped, lenders will typically use the most recent year’s income. If it is on the rise, most lenders will use an average of the last two years’ accounts.
• You must have your latest tax return filed (dated within the last 18 months). You’ll need to provide proof of ID, bank statements (personal and business), personal earnings submitted to HMRC, and your fully filed limited company accounts for the most recent year.
• For self-employed people with complex shareholdings, using a mortgage broker is highly recommended. They can save time by finding lenders who can assess your specific type of income, as not every bank deals with this setup.
  
  

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

For specialist tax advice, please refer to an accountant or tax specialist.