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Hello I am hoping that someone with specialist knowledge will be able to assist me.
My son is the sole director of a small limited business employing himself and two others.
He has been trading for about eight years but only some just done three years as a limited company.
He is a sole director but also pays himself a basic monthly wage. Would he be able to use his wage to base a mortgage on?
I'd recommend he talks to an independent mortgage advisor - they really can help for anyone who runs their own business as they know which lenders to talk to.
As a Director the mortgage company are far more likely to look into the set-up of the business (financial commitments, personal guarantees etc) and not just his salary.
Does he know which mortgage he wants?
I was in a similar employment situation and just asked First Direct what they needed to see, got mortgage no problem (though it was for a small amount relative to property value).
He should seek advice from a fee-free broker. I used L&C and they basically pared down the list based on my personal circumstances (not lived in UK for the whole of the last 3 years, for example) to avoid any kind of automatic rejection. They should then be able to present his options to him before applying, including letting him know how likely he is to be accepted and which documentation the lender will want to see.
These places are generally happy to give advice over the phone and then wait for you to contact them again before actually going ahead with anything.
I am a mortgage advisor. Most lenders will take salary and dividend income combined as the income for the affordability calculator. They would also ask about the company net profits to make sure the company is not making a loss whilst the directors take a share of the turnover. They will usually ask for 3 months bank stats as part of the app so make sure he stays in credit during that time. Better choice of lenders if the LTV is sub 60% or at least the bigger the deposit the better the chances for no hassle.