*MORTGAGE ADVICE NEEDED^^
we’re looking to get a mortgage next year. I do Fba full time now. It’s my understanding that mortgage companies need at least 2 years company accounts. My company accounts are healthy with good growth and profit etc.
In blunt terms- Do they take an average of the salary/dividend you have paid yourself in those 2 years to calculate your affordability?
I’m hoping someone has recently gone through this process and can offer some advice
I personally (if you haven’t already) would set yourself up as a limited company and pay yourself a set monthly wage and then your dividends on top as the regular payslip will show consistent income for the last 6-12mths
They will want to see two years of your personal tax returns. They will use the two year average to calculate how much you can borrow. Typically you can borrow 4.2-4.5 x your annual income. So if your average income over the last two years was £50,000 you’d be able to borrow £50,000 x 4.2 or 4.5 which would be £210,000 to £225,000
Average of 2 years profits + your salary
£100k profit over 2 years and pay yourself £20k per year it would be £70k average