Mortgage lending criteria for clients who are employed by the family business.
At Niche advice we have helped many clients get a mortgage while working for a family business. But be warned Mortgage Lenders will take extra steps to ensure the facts presented to them are correct when it comes to clients employed by family.
If you are employed by family then here are some of the checks you should expect the Mortgage Lender to go through:
- Seek independent confirmation National Insurance has been paid. This might include P60s, year-to-date figures on payslips, tax codes, written confirmation from the Accountant of the business, and some Mortgage Lenders also have data sharing arrangements with HMRC.
- Check the company on Companies House:
– This will detail of persons of significant control, past and present. So being a Company Director in the past and now working purely as an employee might raise alarm bells.
– If the Company Accounts on the website will reveal their profits. And, if the company has made £40,000, and your salary is £60,000 then the case would be unlikely to go through.
– Minor shareholding in the business will be subject to Mortgage Lender agreement.
- The larger the firm the greater the re-assurance. Normally a website search or cross-reference of employee roll number on the payslips can give the Underwriter a feel of the situation. If unclear they might put a call into the Mortgage Broker or Employer.
- Length of employment. The longer the role has been going the better. If it is a second job it is likely this must have been running for at least 6 to 12 months.
- Recent pay-rises cannot show a sharp jump in salary otherwise the Mortgage Lender will view these as too much a coincidence. The same for first-time bonuses.
The list is by no means exhaustive so if you are employed by family and looking for a mortgage I would strongly recommend you talk the case through with a professional Mortgage Broker, such as Niche Advice.
Niche Advice offers appropriate Mortgage advice to people who are Employed by other family members.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Finance Brokers In London. His role is very much focused on Property financing both on residential and commercial lines.