What percentage shareholding in a business can an applicant have before they are treated as self-employed by a mortgage lender?

Applicants who own a franchise or have a partnership interest in a business will be assessed as self-employed, as will sub-contractors who derive income from more than one contract. In many cases, lenders will ask for references from their accountants.

Many lenders would expect applicants to have been self-employed for a minimum of two years and for the business to have been profitable throughout that time. If the business has made a loss, the lenders will want to understand the reasons why.  

The vast majority of banks and building societies do not charge a premium for self-employed borrowers or limited company directors. They can access the same super-cheap fixed and tracker rates.

HSBC for Intermediaries offers limited company directors and self-employed borrowers some of the most competitively priced fixed-rate mortgages in the market.

The bank will consider a limited company director's share of net profit after corporation tax averaged over the last two years, along with their salary/director's remuneration or emoluments. If the latest year is lower than the average, that figure will be used. The last two years' figures will need to be signed by an accountant and the accounts must be dated within the last 18 months.

Company directors who own less than 25% in a company will be classed as employed for income verification purposes. Applications that meet affordability on employed income should not have net profit details included in the assessment. If an application fails affordability based on employed income alone, the application can be progressed using both employed income and net profit. Where the net profit is required for affordability, the application must be evidenced in line with the self-employed income policy requirements.

Company directors with more than 25 per cent ownership will be classed as self-employed and will need to be assessed in line with HSBC's self-employed policy. If there are multiple directors within the business, and the financial accounts do not confirm the distribution of salary to each director, then evidence will be required from either the last two years P60's or last two years tax calculations and corresponding tax year overviews. The latest HMRC documentation and accounts must be dated within the last 18 months.

For customers changing from an employed position to a partner within limited liability partnerships in the last two years, a combination of evidence can be accepted to confirm income for the time have been an employee.

Call Trinity Financial on 020 7016 0790 to secure a limited company director mortgage

Santander for Intermediaries is a good lender for self-employed borrowers with flexible acceptance criteria. The bank offers a range of fixed and tracker rates for self-employed borrowers with a clear credit history.

Where an applicant's shareholding in a company or the combined shareholding of all applicants is 20% or more, Santander will treat applicants as self-employed. Where an applicant’s shareholding in a company is less than 20% applicants will be treated as employed.

Santander for Intermediaries will not accept applications from borrowers who have been self-employed or owned their business for less than two years. They will also decline applications if their company has lost money in the last financial year. 

Santander accepts accountant’s certificates or Self Assessment Tax Calculation forms plus the Tax Year Overview covering 24 trading months for residential mortgage applications. This reduces to a minimum of one year for buy-to-let mortgage applications.

For all self-employed income proof, the most recent year-end must not be more than 18 months before the date of the application. If the applicants’ dividends are exceeding net profit, the figure used for affordability must not exceed the net profit figure. 

The bank considers income from alphabet share ownership's for a director of a limited company and for family business employment, Santander requires bank statements evidencing the latest three months' salary credits.

Call Trinity Financial to secure a Santander self-employed mortgage