Are you thinking of getting a mortgage?
This year we have had an abundance of clients applying for mortgages. Applying for a mortgage can be stressful and this is even more true for business owners. Once you have applied everything is suddenly urgent and happens all at once. This can then result in stress, tears and quite possibly a few temper tantrums!
To avoid any strops, here is a list of the best ways you can prepare before applying as a business owner:
- When you get the lightbulb moment that you want to apply for a mortgage, give us a call or an email. We can then offer you our advice and possibly get you in touch with an appropriate mortgage adviser. It also allows us to plan and prepare to avoid any delays.
- Mortgage lenders are going to asses your income. They will ask for your SA302/ Tax calculation which will confirm your salary and/or dividends. They will also ask for your company accounts to confirm your salary and net profits after tax but before dividends. Collating this information prior to applying for your mortgage will hopefully make the process run smoother.
- To even think about applying for a mortgage your business will need to have been trading for at least 12 months but ideally 24 months.
- The mortgage lender will look into your balance sheet. This will be to check that your assets outweigh your liabilities. If they do not, in the mortgage lenders eyes your company could be in a position that it will not lend against.
- Some mortgage lenders will average out your salary and/or dividends over the past two years. As a growing business this may not be beneficial. There are some lenders that will just consider your latest year, it is probably best to instruct a mortgage adviser to help choose an appropriate lender.
- Decreasing profits can be a bit tricky. If your profits are decreasing this also means your income is decreasing. This will result in mortgage lenders asking questions as they will be concerned that this could be a consistent problem. Before applying, it is probably best to be sure you have a strong constant source of income.
- Mortgage lenders can also ask for an ‘accountants’ certificate’. If asked for we can complete, but there is a charge!
- If using a mortgage adviser, please give us written permission to talk to them. As due to GDPR we cannot hand over any of your personal data without your permission!
TOP TIP – Plan Plan Plan. We can not stress this enough, even if it is a five year plan let us know as soon as possible so we can help you get your mortgage rather than fighting fire. Decisions over tax saving or getting your mortgage need to be made at least 12 months in advance in many cases.