Self-Employed Mortgages in Manchester
Being a business owner, director or self-employed comes with a lot of stresses you might not see as an employee. In addition to the day-to-day running of a business, it also affects aspects of your life such as mortgages. Many people in these roles worry about how much they can borrow and if they’ll qualify. Here, we take a look at self-employed mortgage advice, including business owners and directors.
Self-Employed Mortgage Advice
Your venture might be performing well, but, inevitably, you try and keep your tax liability as low as possible. This is sometimes a result of Accountants encouraging you to put expenses through as high as possible to keep profits low. The issue with this is that it causes a problem when it comes to borrowing money.
Unfortunately, you can’t have it both ways!
Luckily though, there are lenders out there that will assess your income in several different ways. Some lenders will lend more than others and our role is to find the one most suited to your requirements. For example, most lenders average the last two years earnings, but we have access to others that only consider the latest year. This can be beneficial if you’ve seen an upturn in business over the last year.
Director Mortgage Advice
If you’re the Director of a Limited Company, then many lenders will average the last two years of salary, plus dividends. However, some lenders class you as employed unless you own a certain percentage of the company. In these circumstances, even if you are a Director, they might consider going off your payslips for the last 3 months. This, similar to above, can be beneficial if the last three months have been more favourable.
Low Dividend Business Owner Mortgage Advice
As well as the above, some business owners run highly profitable organisations but only feel the need to take a low dividend. This type of applicant can be disadvantaged by the salary plus dividend method as their earnings will seem low. However, there are lenders out there that will consider using the net profit of the Limited company to solve this problem.
If your business is due to complete a set of accounts, you can always contact us with the projected figures. We can then use that information to calculate what your maximum borrowing would be. However, accounts would need to be finalised prior to a formal mortgage application being made.
In summary, calculating maximum borrowing capacity for a self-employed applicant really is a minefield – you could easily go to 10 different lenders and get 10 different answers! In fact, I would quite expect exactly that to happen. If you need to maximise your borrowing capability, I would urge you to use a Mortgage Broker!