Retained earnings - mortgage application

[monsoon1]

Mortgage application question: I'm a company director. Company is 2 years old but has had an extremely busy start and has accumulated a good level of retained earnings already. I have been paid myself 32,400 each year and left the rest in the company (so far) and the other director has done the same. Prior to this I was in a well-paid PAYE job which I left as the company expanded. I plan to apply for a mortgage next year. Due to the nature of the business, trading losses aren't possible so realistically the retained earnings are secure i.e. worst case scenario company has no business in a year and the other director and I pay ourselves 32,400 each out of the retained earnings. I have no existing debt of any sort, zero assets other than cash, and a perfect credit rating. The company has no debt or physical assets either.

My question could banks take the retained earnings of my company into account when assessing mortgage or would they assess me as just earning 32k a year because that's all I have been taking out? Or is a mortgage a complete non-runner altogether without at least 3 years of company accounts, and a higher salary paid to myself?

 

[ryaner]

As you are PAYE paid from the company, the audited accounts may not be needed. Not 100% sure on this.
However they won't take the retained earning into account. If the last few years has thought people anything, its that a sure thing isn't really a sure thing, and what was once thought as impossible, its perfectly possible. Remember the houses never fall in value mantra for example?

 

[daveccork]

Having been through this recently my advice is to increase salary for a few months if you need a higher salary to justify multiples & NDI
Retained earnings are great to demonstrate a profitable business but as far as I know they will look at payslips re ability to repay.
For what it's worth I found PTSB great in understanding my circumstances (BOI not so good)