Is it possible to get a business owner mortgage if the company structure has recently changed?
Banks and building societies can be flexible when issuing mortgages to company owners with complex or changing financial company structures.
Financial company structural changes are often made for tax reasons, but once they have been agreed, many lenders will not accept mortgage applications until the trading accounts are more established.
With around five million private sector businesses in the UK set up in various ways for tax purposes, the lenders regularly receive applications from the self-employed with single or multiple onshore and offshore companies.
Aaron Strutt, product director at Trinity Financial, says: "Some lenders will check the company's net profits to ensure that the applicant’s income is sustainable. However, others can use the salary, dividends or salary and net profit.
"Some may even be able to use accountant’s projections and assess multiple companies to work out the overall income. They may also consider retained profits and big increases in turnover although the lender may well want to the company bank statements."
Changes to company structures when applying for a mortgages
It is not usual for self-employed business owners to run limited companies and change their business structure. For example, their income may be derived from a limited partnership and limited company. Then, they switch to a single limited company or holding company.
If companies adjust the structure for tax reasons, maybe they have closed the companies or partnerships and moved all their assets to another limited company. They may well ask for the accountant's reference to confirm it has changed and there are no material changes to the function of the business. They may also request a projection for the full year.
What type of complex company structures can lenders accept?
Higher earners often set up more complex company structures and seek larger mortgage loans.
Trinity Financial’s brokers have access to the specialists at many of the banks and building societies, and they will take the time to look at company accounts and piece together the structure of businesses.
Some lenders can issue mortgages to the owners of holding companies managing separate limited companies that are not necessarily in the same sectors. They also look at the overall income of their company and take the average income to work out the actual profit.
They regularly issue mortgages for sole traders who have switched to limited companies, taking an average of the incomes. They can also work with limited companies that have been separated.
Call Trinity Financial on 020 7016 0790 to secure a self-employed mortgage, book a consultation, or complete our mortgage questionnaire.
The information contained within was correct at the time of publication but is subject to change.
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