Published 20 October 2012 · Last reviewed 13 April 2013 · Older article — see current rates
To most of the UK Mortgage Lenders you are either ‘employed’ or ‘self employed’ when they set about calculating your affordability.
The reality is most Limited Companies are husband and wife who between them hold all the shares. So it could be argued that you are both ‘employed’ AND ‘self employed’ but in the majority of instances the lenders will not accept this and work solely off the dividend and PAYE income. This penalises the prudent who retain income within the business by restricting mortgage borrowing, and favours those who effectively asset strip to the bone.
What’s the answer then? Well the key is to find a broker that understands the make up of your Accounts, such as Niche Advice, otherwise you are facing an uphill battle to get your limited company accounts shown in the most favourable light. It is almost pointless approaching an individual in a lender’s branch as their employee is unlikely to understand anything outside of the salary and dividends box when referencing it to mortgage affordability. The process needs a Broker to talk to the right individuals in the appropriate organisations otherwise you are destined for disappointment and abortive effort.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.