From salary to dividend - remortgage?
Discussion
Shortly (April) I'm moving from being on a salary to receiving quarterly dividends and a small monthly salary. I'm coming to the end of a house renovation and will want to consolidate my mortgage to a fixed rate from a tracker and am wondering what the impact of my change in remuneration will have on my ability to remortgage in the next few months. I've heard that I may need a couple of years of divis before being able to do so. Is this the case?
It will depend on a number of variables - for example, the scale of the business paying the dividend and the number of years trading.
As a partner in a well established surveying firm, I am remunerated on the same basis as you and, with a good financial advisor, you should be able to find plenty of lenders who look beyond the 'computer says no' response based on salary alone
As a partner in a well established surveying firm, I am remunerated on the same basis as you and, with a good financial advisor, you should be able to find plenty of lenders who look beyond the 'computer says no' response based on salary alone
I recently fixed my mortgage rate with my existing provider and was astonished at the process now. I was on the phone for almost two hours, despite a 30% loan to value and good income etc. There is at least one professional mortgage adviser on here but my view would be to absolutely do this now.
Claudia Skies said:
Easiest way looks like getting it done before your change of employment status.
The house is being renovated and currently is without kitchens or bathrooms, so I assume a remortgage might be difficult at present? These will be installed but not completely by April...Problem is that I also want the benefit of a new valuation to get a better ltv and therefore a better deal so will have to wait. I'd love to be able to do it now but it's not looking possible so I just wondered what others experience of divis etc was.
Edited by z4emsee on Sunday 8th February 18:25
z4emsee said:
Shortly (April) I'm moving from being on a salary to receiving quarterly dividends and a small monthly salary. I'm coming to the end of a house renovation and will want to consolidate my mortgage to a fixed rate from a tracker and am wondering what the impact of my change in remuneration will have on my ability to remortgage in the next few months. I've heard that I may need a couple of years of divis before being able to do so. Is this the case?
How much of the business will you own?z4emsee said:
desolate said:
Why not just delay the proposed changes in remuneration?
The change is based on a company ownership transaction. This is partially complete and is finalised in April. To delay this would cost a lot in lost divis.desolate said:
z4emsee said:
desolate said:
Why not just delay the proposed changes in remuneration?
The change is based on a company ownership transaction. This is partially complete and is finalised in April. To delay this would cost a lot in lost divis.z4emsee said:
Didn't realise I could do this? I already receive a smaller divi as I've owned some shares for 12 months now, but only a small shareholding. I've maintained my full salary in this intervening period.
You will need to speak to the solicitor handling the transaction, but in theory you can, yes.desolate said:
You will need to speak to the solicitor handling the transaction, but in theory you can, yes.
Not if he owns 25% of the business he won't. The level of % owned of a business dictates whether they treat you as PAYE or Self-Employed.More than 20% and it's the Self-Employed/SA302/Company Accounts route..........for which most lenders will want 12 months history as an absolute minimum.......
Sarnie said:
desolate said:
You will need to speak to the solicitor handling the transaction, but in theory you can, yes.
Not if he owns 25% of the business he won't. The level of % owned of a business dictates whether they treat you as PAYE or Self-Employed.More than 20% and it's the Self-Employed/SA302/Company Accounts route..........for which most lenders will want 12 months history as an absolute minimum.......
It's getting a bit complicated but he could go for a convertible preference share.
Thanks chaps. I'm trying to keep this as simple as possible. My current mortgage is a base rate tracker at 3.75% above base obtained at the time 2 years ago for the low fees and no tie ins due to the renovations we are undertaking. As these will finish soon Im looking for a better deal and a longer fix. Is the bottom line that I will have to wait for a couple of years before doing this due to income changes or could some lenders take a view on mine and my company's circumstances?
TBH it sounds as though you are "stretching" yourself somewhat with this new larger mortgage. I think that this, combined with the changing nature of your income, will not make things any easier.
If your change of status is associated with a "promotion" that might be helpful to you but any profit sharing arrangement will always be seen as containing some risk.
If your change of status is associated with a "promotion" that might be helpful to you but any profit sharing arrangement will always be seen as containing some risk.
Claudia Skies said:
TBH it sounds as though you are "stretching" yourself somewhat with this new larger mortgage. I think that this, combined with the changing nature of your income, will not make things any easier.
If your change of status is associated with a "promotion" that might be helpful to you but any profit sharing arrangement will always be seen as containing some risk.
I'm not planning on increasing the mortgage, just going from a tracker to a fixed rate at lower rate.If your change of status is associated with a "promotion" that might be helpful to you but any profit sharing arrangement will always be seen as containing some risk.
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