Where you own 20% or more of a business, lenders will treat you as self-employed for mortgage purposes. Business profits as well as salary and dividend drawings are where lenders will focus.
Dividends vs profits:
Many lenders assess income from a limited company by using the salary and dividend only. Where a company is more profitable, we work with lenders that assess a mortgage using the salary plus the limited company profits.
By using this method, we can dramatically increase the maximum loan available for many people.
Before or after tax?
Lenders that assess based on company profits generally do so using the profit after corporation tax, plus salary drawn. However, it is possible to get a loan assessed from the company profit before corporation tax, plus salary drawn. This may maximise the loan further.
Why use us?
We understand the difference between a salary, a dividend, company profits both before and after corporation tax. We work extensively with lenders that assess based on your Salary plus Company Profit, whereas most lenders assess income from your Personal Tax Return, using your Salary and Dividend drawings only.
One Years Accounts:
It is possible to get a mortgage with only one years Limited Company accounts. Specialist lenders will consider this. Options also depend on the risk profile of the case, as well as your track record in your industry. Where you have switched from Sole Trader or Partnership to a Limited Company, we can help. If you are effectively the same business, but just switched to a Limited Company for tax purposes, we can use the first year of Ltd Co plus the final year of self-employed, to take a 2yr average income.
Professionals:
Recently made a partner in a professional firm? Technically this is usually a switch from PAYE to self-employed, and many lenders will want to wait until you have 2 years of self-employment under your belt to progress with a mortgage. We work with a handful of lenders that understand this is actually a promotion and career progression, and do not need 2 years of self-employment to proceed with a mortgage application.
Daily Rate Contractors:
We also specialise in mortgages for Daily Rate contractors. Many contractors are set up for tax purposes via their own limited company. We can assess options from a dual perspective of lenders that use the daily rate of pay to assess income, as well as those that use limited company profits.
Take a look at our contractor mortgage website here
| Ltd Co Profit | £100,000 * |
| Director Salary | £12,000 |
| Dividends | £48,000 |
Standard assessment will use only the Salary and the Dividends drawn for mortgage purposes.
After Corporation Tax*
Based on a 5x income multiple**
| Salary | £12,000 |
| Dividend | £48,000 |
| Total income | £60,000 |
| Maximum potential loan | £300,000** |
Our method is offers an Enhanced Assessment:
Our strategy enables you to have your mortgage assessed based on the Salary plus your portion of the Limited Company profit:
| Salary | £12,000 |
| Ltd Co profit | £100,000* |
| Total income | £112,000 |
| Maximum potential loan | £560,000** |
Using our method greatly increases the chances of you getting a larger loan. We work with high street lenders, their
rates and fees are standard, there is no increase to pricing because we use this method for mortgage assessment.
