Who owns the profit?
Start with the shareholding and the accounts. The company’s total profit and the applicant’s attributable share are different figures.
Jack CousinsFinance Adviser & Consultancy · jackcousins.com
Lender-policy illustration · Residential
A director who leaves profit in the business
A company director draws a modest salary and dividends while leaving some profit in a profitable business.
Illustrative situation · criteria checked
The policy that makes this worth discussing.
Aldermore’s guide allows salary plus the director’s share of net profits as an alternative to salary plus dividends. That income method cannot be used where the business has current or previous-year net losses, carried-forward losses, or profits needed for ongoing trading.
Keep in view: Do not add retained profit to salary and dividends twice. Underwriting and the full affordability assessment determine what can be used.
Read the lender’s published source ↓Work through the brief, step by step.
The income assessment may reflect the business’s earnings, subject to its continuing cash needs.
What does the business need to retain?
Discuss working capital, tax, upcoming costs and the trading outlook with the accountant before relying on business profits in the mortgage affordability assessment.
How does the income fit the household budget?
Personal drawings, business earnings and the amount needed each month should form one coherent explanation.
These are practical questions for an advice conversation, rather than additional lender criteria.
Bring the facts together before deciding.
I would put the company and personal figures side by side, clarify the accountant’s explanation and compare the appropriate income assessments without counting the same earnings twice.
Explore Company director mortgages ↗A useful place to start.
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Lender criteria sources
Checked . These links lead to the lender’s intermediary information. Criteria can change; current access, product rules, affordability, credit and the property must be checked for the individual case.
- Aldermore residential mortgages criteria guide ↗Page 9, Income we accept at 100%
No product rate, lending approval or completion timescale is promised.
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