low salary and mortgage

**DaveB** · 16 May 2007, 08:05

Originally posted by conqurer

Hi,

There is an obvious advantage of paying a low salary and taking the rest as dividends. But does this not affect your ability to get mortgage from a bank as they can only offer you 4-5 times of your salary. Do dividends also add up to your basic salary for the purpose of getting a mortgage?

Regards.

You have two options :

1) self certify your income, you sign a declaration that your income is sufficient to cover the mortgage and don't have to supply bank statements etc. Downside is you won't get as good a deal from the lender, nay have to pay additional fee's etc.

2) Use a specialist broker like Contractor Money . Just re-mortgaged through them and got a much better deal than I would have done through a standard broker, which I also tried.

**Xenophon** · 16 May 2007, 08:17

DaveB is right.

I hear good things about ContractorMoney, but I do have an IFA who specialises in brokering mortgages for the likes of us. If you would like contact info just send me a PM.

**tim123** · 16 May 2007, 08:51

Originally posted by DaveB

2) Use a specialist broker like Contractor Money . Just re-mortgaged through them and got a much better deal than I would have done through a standard broker, which I also tried.

I found that standard brokers were complete useless at understand the way contractors pay them self.

Getting a mortgage direct from the BS was much easier.

tim

**ASB** · 16 May 2007, 08:52

Some high street lenders will also include dividends in various ways. Alliance and Leicester do [or did] for example. Normally if you own/control your company they will be prepared to accept them as part of income.

Though as DaveB said, brokers can often get better deals. [Even though they are usually paid an acquisition fee].

**weboo** · 16 May 2007, 09:01

You are not on your own, many contractors will have the same problem. Self certify is one way to go, but rates/charges could be higher. Talk to an IFA for some advice though, they are the specialists and know what to do. Some lenders will give you the money no problem, some even have Contractor with own Ltd in their drop downs, but an IFA will get you the best deal

Changes in November 05(Mortgage Day) mean that everything should now be in a KFI(Key Facts) so that you see all charges....that way, you make sure you are not being ripped off anymore by a middle man

**proster** · 16 May 2007, 09:09

Not sure if this is useful in your case but a couple of months ago I was approaching the end of my fixed term mortgage whilst I was changing jobs from being a permie to contractor under a ltd company.

Although the application was originally made whilst being a permie, I had to inform them of the change.

I sent them a copy of my ltd company details, the contract with the EB and a two page explanation of all relevant details, including calculating my gross annual salary based on 44 weeks annual equivalent.

The building society approved the mortgage.

In order to find the best deal, I had done a search through the various portals and found the best offset mortgage rather than go through a broker.

HTH

**ASB** · 16 May 2007, 09:17

Originally posted by proster

In order to find the best deal, I had done a search through the various portals and found the best offset mortgage rather than go through a broker.

Out of interest did you actually approach any brokers or are you just assuming that the best you could do was the best found on the portals. ?

I only ask because when I bought a house a few years ago I went through a similar exercise, the estate agent was adamant I talked to their IFA so eventually I did.

They offered me (from the same lender) a deal with the same basic conditions re tie-in, 0.4% less rate and 600 quid cashback.

**proster** · 16 May 2007, 09:47

I have approached brokers in the past both on my belhalf and my family, but they've never beaten the rates that you can get on the portals.

Occasionally on the portals (e.g. moneyfacts or moneyweb..), you do get mortgages that explicitly state that they're only available through IFAs - but usually there's a better one available directly.

Maybe it'll be different in the future..

**Lewis** · 16 May 2007, 11:17

First Direct and HSBC seem to know all about contracting and will give mortgage based on company accounts.

low salary and mortgage