I’m about to file my first years accounts which are looking healthy. Can I get a Mortgage with one year accounts?
The good news is there are a number of lenders who are now offering the self-employed a Mortgage with one years accounts. There are key differentiating points between the lenders and here’s where a good broker will be able to identify a suitable place for the business without wasting your time and money.
When you’re dealing with these this scenario that your mortgage broker fully understands how lenders treat that self-employed who have been trading one year.
How so? Well for example, your official accounts are likely to have a different year end to the self-assessment period; therefore if the mortgage lender works solely on HMRC SA302s self-assessment the figures will differ. Some lenders may ask for a certificate (questionnaire) from your Accountant which may include a future earnings projection.
If the company is a sole trader or partnership the lenders will work off the net profit figure for affordability. If however, the company is a limited company they will look at the directors remuneration (salary) and either the company profit or dividends drawn depending on their individual lending policy.
General criteria for a Mortgage with one year accounts
- up to 90% loan to value with some lenders
- Up to 4.75 times income multiples
- Company accounts must have been filed with HMRC
- Good past track record working within the industry is desirable
- Accountant certificate (from a Chartered or Certified Accountant)
We also have lenders that will work off the last year’s net profit figure for companies that have been established for at least two years rather than take an average. In this instance the lenders will expect there to be an increasing net profit figure year on year. They would also expect the jump year on year to have a close pattern for example, £16,000, £20,000 then £28,000, and they would question sustainability if the trend was £16,000, £20,000 then £45,000.
If you’re looking for a mortgage with one years accounts filed I suggest you complete the online enquiry form on this page or call us directly on (020) 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.