You’ve been running your business as a sole trader. But now you’re trading through a Ltd company. Can you get a mortgage if you don’t have a full year’s accounts under the new structure? YES! Pete Coombes, expert residential mortgage adviser, explains how.
Even if you have been running the exact same business for 10 years, if you change trading structure to a Ltd company, some lenders will consider it a brand new business! And if you need a mortgage or remortgage you’ll be asked to show 1-3 years’ worth of accounts for the company. Not great if you only incorporated six months ago. But there are options and thankfully not all lenders are the same.
There are some lenders that will take a more pragmatic approach by assessing your mortgage application based on how long you’ve been running your business not on the trading structure. These lenders work out how much you can afford to borrow in one of three ways:
- Take an average of your last two’s years income
- Take your lowest annual income figure over the last two years
- Take your most recent year’s income
Of course, you’ll need to verify your income and business longevity, so bear in mind:
- Lenders will require confirmation that you have stayed in the same line of work for certain period of time
They will want to see a minimum of two years’ trading history before you made the switch to a Ltd Co
- You will be required to provide proof of income for when you were a sole trader
Lenders will ask to see your SA302s and tax returns – your accountant will be able to provide you with this documentation
- Some lenders will also request an accountant’s certificate
NOT to be confused with certified accounts! Basically, this is a document from the lender which is completed by your accountant. It certifies the level of your income and it’s future sustainability, i.e. a projection of the current year’s earnings (not all lenders ask for this bit!)
If you know which lender to approach, it’s very straightforward. It can be as easy as getting a mortgage or remortgage when you are permanently employed. Even if you’re a landlord operating via a limited company.
That’s where we come in! We know which lenders to go to based on your individual circumstances. So if this sounds like you and you’d like some more information then please get in touch.
Pete Coombes has left Mortgages for Business for pastures new. For more information or for any questions relating to this blog, please contact the Residential Team on 0345 345 6788, where one of our consultant mortgage brokers will be happy to assist.
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