Is paying min dividends/salary going to create problems with mortgage applications ?

[Lumiere]

You'll likely end up with a Halifax mortgage.

Affordability is based on 48 x 5 x day rate.
Requires at least 4 weeks remaining on your contract.

Very very laid back approach to contractors (arguably too generous imo), but never had an issue when getting a mortgage.

Thanks, this is what I am mostly looking for.

Affordability = annual income I assume, and then you can generally borrow 3.5-4 times that ? So for e.g. £500 rate = £120K income = £475K mortgage with 25% deposit needed, based on Halifax calculator. Were rates competitive, different if direct/broker ?

Will check Barclays and brokers too (that questionnaire though, last time it felt like I confessed to a priest, published my life's memoir and had an interview in MI5 at the same time)

[Lumiere]

Lumiere It depends on what you mean by 'create problems' and how hung up you are on rates.

Assuming you use a broker, it won't stop you from getting a mortgage but it might well mean you end up having to settle for a slightly more expensive lender.

As others have mentioned above, do use a good broker, they're worth their weight in gold.

Problems = not passing lender's criteria, not being offered enough, higher rates indeed.
Higher rates is not a major issue as long as I can overpay with money from previous house sale within a year or so.
Used broker last time, I just want to avoid the situation of spending days on providing information and documents they need and then finding out I can't get a mortgage because of recent pension contributions.

[PerfectStorm]

if you go to a specialist broker, you'll spent £750-1000 for them to tell you "Halifax, Clydesdale or Nationwide"

Their exclusive rates are a sham.

[Lumiere]

if you go to a specialist broker, you'll spent £750-1000 for them to tell you "Halifax, Clydesdale or Nationwide"

Their exclusive rates are a sham.

I spoke to Halifax directly, although on their website they say annual income is estimated based on the daily rate, the advisor told me they look at last 2 years self-assessment numbers instead

[Ketto]

I’m with Natwest since 2022 and have been with Clydesdale recently both based solely on day rate.

[PerfectStorm]

I spoke to Halifax directly, although on their website they say annual income is estimated based on the daily rate, the advisor told me they look at last 2 years self-assessment numbers instead

They just told me to put day rate * 5 * 46 as income and it'll all get sorted when you progress the application. And, in fairness to them, it was.

[Rik1087]

Currently going through a mortgage process. So far, fairly painless. Had to supply a copy of my contract which had 5 months remaining, credit reports and last years submitted accounts. Pre-approved fairly quickly.

upon full submission, they require more details, one being last 3 months bank statements…which I’m a tad confused by as it’s the businesses statements they have asked for….surely it would be my personal accounts they require to see what I am doing with the dividends? Anyone else had similar or do you end up providing personal account statements also?

all in all, a lot less painful that I thought as they based borrowing all off of the contract and day rate. As others have said 46 x5 seems the usual calculation.

[Lumiere]

Currently going through a mortgage process. So far, fairly painless. Had to supply a copy of my contract which had 5 months remaining, credit reports and last years submitted accounts. Pre-approved fairly quickly.

upon full submission, they require more details, one being last 3 months bank statements…which I’m a tad confused by as it’s the businesses statements they have asked for….surely it would be my personal accounts they require to see what I am doing with the dividends? Anyone else had similar or do you end up providing personal account statements also?

all in all, a lot less painful that I thought as they based borrowing all off of the contract and day rate. As others have said 46 x5 seems the usual calculation.

That's good to hear.

I am still looking for a suitable house, as I understand agreement in principle from Halifax website is useless .. so I just find a house, get offer accepted, find solicitor etc., book face-to-face appointment with Halifax mortgage advisor, apply for mortgage at the same time, do I miss anything - been a while since I bought a house ?

What can I do to prepare meanwhile, look for solicitor recommendations, try to spend less on credit cards (?) and not apply for new credits etc. ?

[WTFH]

What can I do to prepare meanwhile, look for solicitor recommendations, try to spend less on credit cards (?) and not apply for new credits etc. ?

1. Sign up with estate agents if there is a particular area you are interested in, they will send you notifications of houses before they hit the open market
2. Pay off any debts you may have.
3. Save up as much of a deposit as you can - not in your company but in an easy-access place. I'd suggest stick £50k in premium bonds.
4. Do you have a property to sell? If so, get it valued, get it on the market, and use the same solicitor/conveyancer to handle both sale and purchase (speeds up background checks, etc).
5. Find a local solicitor/conveyancer. It might cost you a bit more, but it means if you need to visit in person and when you need documents witnessed, it's far quicker.
6. Your mortgage supplier will want a survey done on the house, you'll have two choices, a basic one or a full one. Depending on the age/condition of a house, it may be a good idea to spend the extra for a full survey, it can also be used as part of the price negotiations.
7. Have a list of what you're looking for in a property, what is essential, what is nice to have, and what you really don't want. Work out what/where you are prepared to compromise.
8. Speak to removal firms. If you are going straight from one place to another, that's relatively straight forward, if you're going to be putting stuff in storage, then storage rates can vary, it may be cheaper to store where you are moving to, rather than where you are moving from (for example)
9. Start to tidy, pack, freecycle, charity, etc your current place. Less clutter makes for an easier move.
10. Moving house is very stressful. Try to stay calm, and remember that others in the chain are going through similar stress, so don't be a prat with them.

[Martin@AS Financial]

Currently going through a mortgage process. So far, fairly painless. Had to supply a copy of my contract which had 5 months remaining, credit reports and last years submitted accounts. Pre-approved fairly quickly.

upon full submission, they require more details, one being last 3 months bank statements…which I’m a tad confused by as it’s the businesses statements they have asked for….surely it would be my personal accounts they require to see what I am doing with the dividends? Anyone else had similar or do you end up providing personal account statements also?

all in all, a lot less painful that I thought as they based borrowing all off of the contract and day rate. As others have said 46 x5 seems the usual calculation.

If you are securing your mortgage off your contract - you are essentially borrowing against the turnover rather than your salary and dividends.

I suspect the bank will be looking to see your invoices from your client being paid into your business account in the same way that if you were perm, your salary would be paid into your current account. It will also allow them to see your business outgoings as well such as travel, indemnity insurance, accountant etc.


Hope that helps.