Can I get a mortgage working off latest years income figures
If you are reading this article you probably are interested in mortgages working off latest years income as it will have a direct bearing on your borrowing potential.
Mortgages working off last year’s accounts are typically polarised into two categories:
- Companies trading 1 year
- Companies trading 2 or more years where the profits show an upward trend year-on-year.
I will explain the stance on both types of mortgages working off last year’s accounts if you read on.
Mortgages using the latest years income – Companies trading 1 year
To the untrained mortgages for companies trading 1 year are reserved for “Specialist” Mortgage Lenders who offer higher than normal interest rates and are not generally available directly to the public. However, there is a number of “household named” Mortgage Lenders that will consider working off last year’s accounts, for which most (not all) insist on a minimum deposit of 25%.
To work off latest years income the Mortgage Lenders might ask for an Accountants projection for the next 12 months and look for prior experience in the same industry for extra reassurance.
Accounts year end normally allow you to apply quicker for a mortgage than Self-Assessment Tax Calculations which may only reflect a partial year trading as they run from 6th April to 5th April the following year.
Key mortgage criteria for Companies trading 1 year:
- Specialist Mortgage Lenders up to 90% loan-to-value.
- Household name Mortgage Lenders up to 95% loan-to-value (but most cap at 75% loan-to-value).
- Accountant’s projection may be required.
- Prior industry experience may be needed.
- Accounts will provide a truer reflection of first years trading and may enable you to apply sooner.
- Retained profit in the business may be considered.
- Company pension contributions may be ignored.
Mortgages working off latest years income – Companies with upward trend in profit
You could be advised that Mortgage Lenders take an “average over a number of years” profit rather than apply a formula working off last year’s accounts. This is certainty true for certain lenders if the profit jumps sharply from the year before or it fluctuates up and down. So you may need to find a professional mortgage broker so that you choose a Mortgage Lender which operates on the basis of “working on latest years income”.
Key mortgage criteria for Companies trading 2 or more years:
- Specialist Mortgage Lenders up to 90%loan-to-value.
- Household name Mortgage Lenders up to 95%loan-to-value provided the increase year-on-year does not typically surplus 25%uplift.
- Retained profit in the business may be considered.
- Company pension contributions may be ignored.
NicheAdvice offers appropriate advice to mortgage applicants working on last year’s accounts.
