Mortgages!

[TomE]

Just about to begin working for myself, set up a Ltd co and due to start invoicing next week.

I currently have a mortgage, its a fixed rate and it runs out in April next year. Never missed a payment on it so have a good history (will have been with them for three years by then)

Have I done something stupid by setting up my company now meaning I'm going to struggle to get a mortgage with only 6 months accounts, or do you think I should be ok?

any help appreciated!

[anonymous-user]

Easiest route would be to switch to another deal with your existing lender. They won't ask anything other than which product (rate) do you want.

[TomE]

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

[Leondrums]

Or if you are still currently classed as employed switch lenders now so you can prove up to date wage slips etc - if you have a redemption to pay then switching to a different rate after your fixed period with your current lender would be the best option.


Oops - just read you are fixed in, mortgage market is becoming a little better of late, you could self cert an achive up to 85% of your property vlue but rates for self cert are not great at present and are'nt likely to be anytime soon (high risk mtgs such as this, poor credit, development funding and buy to let are all quite high at the moment).

Edited by Leondrums on Thursday 28th August 12:52

[Eric Mc]

TomE said:

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

You are emphatically NOT self-employed. It would be wrong of you to tell the mortgage company this as it's not true.

You are a director/shareholder of your own trading limited comapny and your personal income will either be normal PAYE salary from your limited company, dividends based on your shareholding in the company or (most likely) a combination of both.

Self Certification may not be necessary as you should:

a) be processing monthly salary amounts for your wages

b)be able to produce dividend vouchers for dividends paid by the company to you.

If necessary, Self Assessment tax return details can also be produced as evidence of earnings as and when they become available.

[animal44]

Sorry for invading :-) but are directors liable to minimum wage?

[Eric Mc]

Not in their own company.

[TomE]

Thanks very much for all the help and info, hopefully I'll be able to produce some paperwork by then to back up my claims of earning.

Its made me feel a bit better anyway! I just hope it doesnt come round to bite me when I come to renew!

[Olf]

animal44 said:

Sorry for invading :-) but are directors liable to minimum wage?

You can pay yourself enough money to satisfy NI stamp. Speak to you accountant.

[animal44]

Eric Mc said:

Not in their own company.

Oh good, no need to faff about allocating to salary then :-)

[edb49]

Eric Mc said:

TomE said:

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

You are emphatically NOT self-employed. It would be wrong of you to tell the mortgage company this as it's not true.

You are a director/shareholder of your own trading limited comapny and your personal income will either be normal PAYE salary from your limited company, dividends based on your shareholding in the company or (most likely) a combination of both.

I held the same view as this until I was put right recently by a very educated chap. You are self-employed if you set your own wages or write your salary cheque; whether that is through being a sole trader, partner, director of your own limited company, etc.

[2 sMoKiN bArReLs]

edb49 said:

Eric Mc said:

TomE said:

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

You are emphatically NOT self-employed. It would be wrong of you to tell the mortgage company this as it's not true.

You are a director/shareholder of your own trading limited comapny and your personal income will either be normal PAYE salary from your limited company, dividends based on your shareholding in the company or (most likely) a combination of both.

I held the same view as this until I was put right recently by a very educated chap. You are self-employed if you set your own wages or write your salary cheque; whether that is through being a sole trader, partner, director of your own limited company, etc.

Eh?

[Olf]

2 sMoKiN bArReLs said:

edb49 said:

Eric Mc said:

TomE said:

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

You are emphatically NOT self-employed. It would be wrong of you to tell the mortgage company this as it's not true.

You are a director/shareholder of your own trading limited comapny and your personal income will either be normal PAYE salary from your limited company, dividends based on your shareholding in the company or (most likely) a combination of both.

I held the same view as this until I was put right recently by a very educated chap. You are self-employed if you set your own wages or write your salary cheque; whether that is through being a sole trader, partner, director of your own limited company, etc.

Eh?

These very educated chaps don't often fair well against Her Majesty's Inspectors of Taxes. Definitions are their game not ours.

[AdeTuono]

edb49 said:

Eric Mc said:

TomE said:

That is what I am hoping will happen.

Do I have a duty to tell them now that I've moved to self employed?

You are emphatically NOT self-employed. It would be wrong of you to tell the mortgage company this as it's not true.

You are a director/shareholder of your own trading limited comapny and your personal income will either be normal PAYE salary from your limited company, dividends based on your shareholding in the company or (most likely) a combination of both.

I held the same view as this until I was put right recently by a very educated chap. You are self-employed if you set your own wages or write your salary cheque; whether that is through being a sole trader, partner, director of your own limited company, etc.

Think your very educated chap is wrong on this one. A limited company is an entity in it's own right, and you are an employee of that entity.

[edb49]

We're not talking about HMRC's definition of self-employed though, it is what the bank defines as that. (The OP was talking about mortgages.)

[SLacKer]

Been in business 13 years and never had a problem getting a mortgage. Although we go for self certified < 80% LTV so we don't reveal our income.......

[Eric Mc]

edb49 said:

We're not talking about HMRC's definition of self-employed though, it is what the bank defines as that. (The OP was talking about mortgages.)

Definitions are set by those who wish to set the definitions. For both LEGAL and TAX purposes, ordniary self-employment and operating a limited company are most definitely NOT the same.

If the banks want to think otherwise, that is their perogative - even if the important matter of HOW personal income is derived from the trading entity (as it is different for sole traders and companies) is not taken on board by the lender. No wonder they're in trouble.