Running a successful business does not automatically make getting a mortgage straightforward.
In fact, one of the frustrations I regularly see is a business owner thinking:
“My business is doing well, so why is the bank saying I can’t borrow what I expected?”
The answer is often simple: lenders don't necessarily look at your income the same way you do.
If you're employed, assessing income can be relatively straightforward. Salary, payslips, perhaps bonuses or overtime.
For a business owner, there can be much more to consider:
Salary and dividends
Share of company profits
Retained profits
Most recent accounts
SA302s and tax calculations
Director's loans
Business structure
How long you've been trading
Recent growth or changes in profitability
And importantly, different lenders can interpret the same business very differently.
Don't automatically increase your income just to get a mortgage
This is where good mortgage planning should involve your accountant.
A business owner may deliberately leave profits inside the company rather than withdraw everything personally. That can make perfect commercial sense, but some lenders may only assess the income actually taken from the business.
Other lenders may be prepared to look deeper into the company's performance.
That distinction can make a significant difference.
I don't believe the solution should automatically be:
“Take more salary or dividends.”
The better question is:
“Which lender is most appropriate for the way your business and income are structured?”
Think about your mortgage before you need one
If you're a company director, contractor, sole trader, landlord or other self-employed professional and you're considering buying or remortgaging in the next 6–12 months, speak to a mortgage specialist early.
Don't wait until you've found the perfect property.
A conversation between you, your accountant and your mortgage adviser before an application can identify potential issues while there is still time to deal with them.
I've worked in financial services for over 30 years, and today a significant part of my mortgage work involves business owners and clients whose circumstances don't fit neatly into a standard box.
Sometimes the problem isn't affordability.
It's finding the lender whose criteria properly reflect the client's circumstances.
If you're a business owner planning to buy, move, remortgage or invest in property, I'm always happy to have an initial conversation and help you understand the options available.
Anthony Lindsay
Mortgage Specialist | Business Owners | Self-Employed | Property Investors
Your home may be repossessed if you do not keep up repayments on your mortgage. Mortgage advice is subject to individual circumstances, status and lender criteria. This post is for general information and does not constitute personal financial advice.
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