Whether you are a first-time buyer or subsequent home mover or just want a remortgage, if a lender considers you to be self-employed the process can become more complicated. However at Mortgage Hunters we have considerable expertise in successfully arranging mortgages for the self-employed.
Question: I am self employed – can I get a mortgage?
Answer: If you are any of the following, you could be classed as self employed:
- A director of limited company with a shareholding of 15% or more.
- A sole trader.
- A partner in a business whether the partnership has Limited Liability or not.
Mortgage lenders will usually use:
- Your net profit before tax if you are a sole trader or partner.
- Your salary and dividends if you are a director of a Limited company.
The disadvantage of the lender using your salary and dividends are twofold:
- You may have to withdraw more salary/dividends than you would otherwise need to, to enable qualification for the amount you wish to borrow and thereby pay more personal tax.
- Risk your company’s viability by adversely affecting its cashflow.
Question – Is there a solution?
Answer – In certain cases it may be possible for us to base your potential mortgage on the amount of the net profit generated by your company, which is attributable to your percentage shareholding, i.e. 100% or less.
Obviously you would need to make sure you withdraw enough salary/dividends from your company to be able to comfortably service your mortgage, however this may not create as large tax liability.
We always recommend that you discuss the best way to withdraw salary and dividends from your limited company with your accountant, as they are best placed to interpret HMRC taxation rules.
We are always happy to discuss the above with your accountant to ensure they are happy with any decision and obtain figures and paperwork. For more information on mortgages for the self-employed visit Mortgage Hunters website
Mortgage Hunters is always ready to have initial discussions with you to explore the best way to achieve your mortgage goal and help you understand how to put yourself in the best position.
If you would like to explore how much you could borrow please telephone us on 01438 359300 or email us at info@mortgagehunters.co.uk