Specialist Mortgages - A Mortgage Now

6 x salary mortgage

amnteam — Wed, 20 Jul 2022 08:44:35 +0000

Yes, there are 6 times salary mortgage lenders on our panel.

What you will need

To obtain a 6 x salary mortgage you will need:

Clean credit record
Household income (pre-tax) of £100,000 or more
Professional status (Actuary, Barrister, Accountant, Pilot, Dentist, Doctor, Solicitor)
Minimum 10% deposit

These products are not designed for borrowing under £500,000, so you MUST meet the income criteria

Call us now on 020 8979 9684

How much will it cost?

Example £595,000 borrowing with 15% deposit – 30 year term.

Expect to pay around £2,750 pcm

Call us now on 020 8979 9684

How can 6 times salary mortgage lenders be so generous?

Mortgage affordability calculations are made based on your income and outgoings, and the interest rate you are expected to obtain.

In order to allow for later increased costs in the event of mortgage rate rises, lenders will apply a stress test to your calculation which will usually limit borrowing to 4 to 4.5 x income.

Our 6 x salary mortgage lenders offer long-term fixed mortgage rates which remove the risk of future rate rises. Taking that worry off of your toe and allowing them to lend you more.

6 times income mortgages for the self-employed

Our lenders will also offer 6 x income mortgages to self-employed applicants.

Affordability can be based on most recent year’s income alone.

Call us now on 020 8979 9684

When should I consider a 6 x salary mortgage?

A 6 times salary mortgage is useful if you live in one of the more expensive mortgage areas of the Country, or if you have seen your ideal home that would ordinarily be out of your budget.

Since the mortgage products available are designed for stability they will tend to carry early redemption penalties. You should therefore expect to wish to maintain the property and the mortgage for the medium to long term.

You can use a small or large deposit for your purchase but expect to put down at least 10%.

If you are considering a high value property but the stamp duty land tax costs are eating into your available funds, these 6 x time income mortgages can be particularly useful.

If you are in a Professional Role where your income is likely to increase substantially in the coming years these products can be really useful. Although you stretch affordability today, the fixed rates offered gives you stability whilst your income catches up with your lending.

Remortgage?

Six times salary mortgage is also available for remortgage – ideal if:

Your income has dropped since your initial purchase
You are looking to raise extra for refurbishment
You have moved from two incomes to a single income
You are buying a partner out

The post 6 x salary mortgage appeared first on A Mortgage Now.

Mortgages for Company Directors

amnteam — Sun, 23 Jun 2019 08:32:03 +0000

Mortgages for Company Directors

Mortgages for Company Directors can be raised based on your PAYE or Dividend Income, and also on Retained Profit. Specialist mortgage brokers can assist where trading history is minimal, profit has fluctuated, or the trading situation is particularly complex.

We can help where:-

Income comes mainly from dividends
Profit is retained within the business
SA302s are not available
There is a limited trading history
There are multiple limited company directorships

In fact, whatever the issue, we can arrange Mortgages for Company Directors according to mortgage needs.

For more on Mortgages for Company Directors read on …

Mortgages for Company Directors

If you run your business as a limited company, you will usually have a shareholding in that business.

If you do not have a shareholding but are still a company director, the lender considers you an employee – in fact, some mortgage lenders will underwrite you as an employee if you own less than 25% of the limited company.

If you have shares in a limited company, the lender will want to see the accounts of the business and will be interested in the income you derive from the business and in what form it comes to you.

If you’d like to find out more, please read our blog on getting a mortgage as a limited company director here.

PAYE Income

If you receive PAYE (pay as you earn) payments from your limited company, your mortgage lender will consider the gross (before tax) level of those payments as income for mortgage purposes.

Many limited company directors are advised by their accountants to take a minimum level of PAYE and most of their income in the form of dividends – this is where the complications start.

Dividends

Dividends are a share of limited company profits paid to shareholders by the company on the advice of the board. In a smaller limited company, the ‘Board’ are also typically the shareholders and therefore dividends are a natural way of paying directors income from the business.

Dividends are subject to income tax and considered as part of the director’s income by most, but not all, mortgage lenders.

Retained Profit

If a limited company makes a level of profit which is not taken out as dividends by the shareholders, this is known as retained profit (as it is retained within the business).

Mortgage Lenders can be particularly cagey about using retained profit to support a mortgage application from a company director. The view is that the retained profit has not been declared as a dividend and a difficult trading period for the business could see it swallowed up and not available to the shareholder or director as income.

Is a mortgage based on turnover or profit?

A mortgage is based on profit for sole traders and partnerships. For limited company directors, mortgages are based on PAYE and dividends, or PAYE and share of post-tax profit.

Can you get a mortgage based on turnover?

No, mortgage lenders are interested in profit, not turnover.

Can I get a mortgage if my business makes a loss?

Only in exceptional circumstances – a business that does not make a profit is a very poor bet for a mortgage lender.

Mortgage Underwriting and Retained Profit for Company Directors

A handful of mortgage lenders will consider PAYE, dividends, and retained profit from a company director when underwriting a mortgage – however, each lender’s approach to this differs.

The majority consider retained profit only after tax (Corporation Tax) has been allowed for – this leaves a ‘hole’ of up to 29% in your usable income.

Some lending sources will consider retained profit before tax which is clearly the most flexible and useful approach.

Call us now on 020 8979 9684

Proving your income

Limited companies will use the services of an accountant. Lenders will often obtain the information they need to underwrite your mortgage from your accountant.

Sometimes, your mortgage lender will ask for the last three years’ accounts for the business, occasionally they work on an accountant’s reference or letter.

The accountant’s reference needs to be provided on a specific form supplied by a lender and known as an ‘accountant’s certificate’. The accountant’s certificate will usually ask for PAYE and dividends received, with figures required for the past three trading years. Even if a mortgage lender does not consider retained profit in its calculations, it will want to be sure that the level of dividend received by the applicant can be supported by the profit from the business. If lenders see a trend of dropping profits, the alarm bells will ring, and it could affect your ability to raise a mortgage.

If you do not have a three-year trading record, many mortgage lenders will not consider you.

If you are not prompt in putting your accounts together or submitting your tax returns this can cause an issue. Mortgage lenders need the most recent provable period of trading profit to have ended within the past 18 months.

Fluctuating profit and income for Mortgages for Company Directors

Varying profits and income can add complications to your application.

A dip in profits needs to be explained to the lender and handled in the right way on application.

A sudden and marked rise in profits can sometimes be more of a hindrance than a help to a mortgage application.

Most lenders will take a two or three-year average when calculating accessible income and this is not always helpful to the applicant.

Deposits from company funds

If your deposit money is coming from retained profit held in the form of cash within the business, be aware that this can be an issue for lenders. Lenders do not like to see large sums of cash leaving the business just as they are being asked to make a lending decision based on the continued trading success of that business.

We have even seen this remain an issue for lenders after the accountant has confirmed that the loss of the funds will not affect the ability of the business to trade effectively.

A smarter approach is to move the cash out of the business and into your personal account a few months before you apply for your mortgage.

Our recommendations

Mortgages for Company Directors are not a simple application for a mortgage lender to consider due to the considerations listed above. Therefore, we recommend you do not approach lenders directly.

If you approach the wrong mortgage lender you could waste time, and money, and put credit searches on your record unnecessarily.

For this reason, you should ask an independent mortgage broker to help you arrange your mortgage, and one that specialises in assisting the self-employed.

If you need a limited company director mortgage or re-mortgage – contact us now.

If you are asked for your income by your mortgage broker, you need to quote your PAYE and dividend income. Make your mortgage broker aware of the make-up of your income from the business, particularly where retained profit is a factor.

Make sure your accountant is ready to assist in your mortgage application by responding promptly to requests for information. Have copies of three years’ accounts ready (if available) signed by both the directors of the business and your accountants.

Obtain your last three years’ SA302s from HMRC so that they are available to the lender.

Where possible, avoid using retained profit as your source of deposit.

Frequently Asked Questions

Can a company director get a mortgage?

Yes, a company director can get a mortgage. If that director owns less than 25% of the property, the lender will typically consider them employed. If they own more than that, they will typically be considered self-employed.

How much mortgage can a company director get?

The amount of mortgage a company director can get, as with all applications, will be based on income. Most lenders will consider PAYE and dividend income. Some will consider PAYE and share of post-tax profit.

Can you get a mortgage if you have a limited company?

Yes, you can get a mortgage if you have a limited company. If you do run a limited company, it is always best to use a mortgage broker as mortgage applications for limited company directors can be tricky.

Do dividends count towards a mortgage?

Yes, lenders will count dividends towards a mortgage. If you are not the majority shareholder, however, the lender may consider that the payment of dividends is not under your control.

Can I get a mortgage if I own my own business?

Yes, business owners obtain mortgages every day. If you are a business owner seeking a mortgage, you are best working with a mortgage broker as the applications can get quite tricky.

Can I borrow money from my business to buy a house?

Mortgage lenders will consider this a loan and they do not like using loans as deposits for a mortgage.

The post Mortgages for Company Directors appeared first on A Mortgage Now.

Offset Mortgage

amnteam — Sat, 23 Jul 2011 08:32:37 +0000

An offset mortgage gives you the ultimate flexibility with your mortgage, but what are its benefits, who should consider using this type of arrangement, what are the risks involved?

What are the benefits and risks of an offset mortgage?

Offset mortgage benefits

Cash flow – also have cash available instantly. Pay funds towards your mortgage debt yet be able to call on them when you need them
Flexibility – pay more when you can, less when you need to, pay lump sums, drawback lump sums
Savings – make massive savings on interest costs over the term of your mortgage
Protection – protect your lifestyle against the unexpected by keeping cash to hand

Offset mortgage risks

You need to be disciplined in managing your mortgage, or you may find yourself with a debt you struggle to repay at a later date.

An offset mortgage means you can:

Repay your mortgage in a way that works for you
Benefit from a massive reduction in mortgage interest costs due to the effect of offsetting

Use offsetting to strip years off your mortgage

Offset mortgage rates

Accord Offset Mortgage Rates

5 year fixed offset mortgage 5.95%

Barclays Offset Mortgage Rates

Tracker offset mortgage rates only from 6.47%

Coventry Offset Mortgage Rates

5 year fixed offset mortgage 5.85%

Family Building Society Offset Mortgage Rates

Discounted offset mortgage rate from 6.19%

Halifax Offset Mortgage Rates

Halifax do not currently offer any offset mortgages.

Hinkley and Rugby Building Society Offset Mortgage Rates

No current rates

Melton Mowbray Building Society Offset Mortgage Rates

No current rates

Nationwide Building Society Offset Mortgage Rates

Nationwide do not currently offer any offset mortgages.

Scottish Widows Bank Offset Mortgage Rates

2 year tracker offset mortgage 5.95%

Woolwich Fixed Offset Mortgage

Woolwich are now under the Barclays brand.

Call us now on 020 8979 9684

Using your savings for an offset mortgage rather than putting them in a savings account

Today inflation is running at 11% (RPI). Can you even best inflation with your savings in a deposit account?

Holding your money in an online savings account may pay you just 1.01% interest (for example Post Office)

As a higher-rate taxpayer, your net return is just 0.66% after tax.

Holding £50,000 in the Post Office therefore costs you £5,165 a year after the effect of inflation.

The same £50,000 offset against a typical offset mortgage balance saves you £1,750 in interest with no tax to pay.

Also…

No need to move your savings regularly to maintain a competitive
No need to worry about introductory offers
No need to worry about 90-day notice periods
No need to use up your ISA limit

How an offset mortgage works

With a standard mortgage you borrow money and pay interest on the full amount outstanding. When you pay funds into your mortgage, you cannot take them back again without making a formal application to the Lender.

With an offset mortgage you put your savings into your mortgage account.

Those savings are then offset daily against your mortgage balance before interest is applied.

You can withdraw your savings at any time with no limit. This allows you to massively reduce your mortgage interest when it suits and have access to cash when you need it. You pay off your mortgage in less time, whilst keeping control of your money.

Who should consider an offset mortgage?

Ideal offset mortgage clients include those with:

Fluctuating income
Seasonal income
Large bonuses
Commission work
Self-employment

Or those who simply want to use an offset mortgage to take years off their mortgage term and save thousands of pounds in interest.

Offset mortgage myths

Too expensive – no longer, offset mortgage rates in today’s market are highly competitive
Need a big cash pot to make it worthwhile – not true, every penny in your offset account makes a difference
Too complicated – offset accounts are simple to understand, and you can manage yours online
It is a self-employed product – employed clients find offsetting just as valuable as the self-employed

Interest only offset mortgages

Most mortgages on main residences are set up today on a capital repayment basis meaning that every month you pay interest on your mortgage and clear a little capital. In this way your account is set up to clear totally over a prescribed period (for example 25 years)

With an interest-only mortgage, your commitment is simply to cover your interest payments monthly repaying the capital through other means such as:

Other investments
Other property
Pension funds
Inheritance
Sale of property

Unlike the situation in the past, the Regulator has recently taken great interest in the basis on which Lenders offer interest-only mortgages. Rules on paying back capital through equity investments are now so tight as to be impractical.

Repaying your capital through the sale of your home and downsizing is an option that mainstream lenders consider perfectly viable in certain circumstances.

Make your savings work harder

Still not sure? watch our video.

View our video – offset mortgage

Flexible Mortgages

How does a flexible mortgage work?

A flexible mortgage is designed to allow the borrower greater flexibility in how they service the borrowing. It will typically feature the ability to overpay the mortgage, or no early redemption charges. The ultimate flexible mortgage is the offset mortgage.

What does a flexible mortgage mean?

A flexible mortgage means a mortgage that is designed to give the borrower some flexibility with regard to overpayment.

What are the features of a flexible mortgage?

Features of a flexible mortgage typically include the ability to overpay above 10% per annum or no early redemption charges. An Offset mortgage is the ultimate flexible mortgage and provides further flexibility.

The post Offset Mortgage appeared first on A Mortgage Now.