Limited Company - Future mortgage application

novice_dub

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Good evening All,

I’m hoping someone more knowledgeable than myself might be able to share any thoughts they may have on the following,

Some background info:
I’m in the process of setting up a limited company with two others - we will all own equal shares.
I will be employed by this company - 60k pa, the others will not.

I was attempting to purchase a house pre-covid.
And have been made redundant recently.

My goal is to get back to buying a house as soon as possible. Rent in Dublin is eye watering!

The majority of information online regarding self employed mortgages seems to be geared towards sole traders/ limited co with one owner.

In my situation is it the same - 2/3 years accounts plus tax docs?

In this scenario,
In year 2 & 3 (all going well!) my salary would increase. Would they take the average over the three years or would the look at six months payslips?

I’m also interested to know how company cash/ assets are viewed, if at all?

I will be having a meeting with our accountant at some stage about this.
I’m just trying to get my head around it and make sure I’m covered for the mortgage value I need from the start.
 

Gordon Gekko

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5,203
The best thing to do would be to speak with a broker. He or she would deal with scenarios such as yours pretty regularly.
 

cremeegg

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You will be a person in employment earning €60k a year and assessed for a mortgage initially on that basis.

The bank may or may not go on to look at the strength of your employer, they will see that it is a new company of which you are 1/3 owner, so not good.

The bank may look at the company accounts if they go this deep into your application. Any issues will be very damaging, but a strong set of accounts will not be correspondingly useful. If the company has a problem, you have a problem. If the company has a strong asset position that is of no use to the bank.
 

RedOnion

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You will be a person in employment earning €60k a year and assessed for a mortgage initially on that basis.
It'd be slightly different where OP a 1/3 shareholder of their employer, especially if a director.

These are looked at on a case by case basis.
 

novice_dub

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Thanks for the responses.

I used a broker the last time I applied so will check with them and report back.

In the meantime, if anyone has had any similar experiences to share it would be great to hear any insights you might have.
 

RedOnion

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In the meantime, if anyone has had any similar experiences to share it would be great to hear any insights you might have.
It's really difficult to give you advice without knowing more about the company.

The vast majority of newly 'self employed' mortgage applicants are actually day rate contractors operating via a company. In those scenarios it's generally clear cut - show you've got a contract with a client, and it's pretty much the same as being an employee, with some extra paperwork.

But, this sounds like a new venture?
Are you a director or not?
How is the company being funded to pay your 60k salary?
 

Zenith63

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I took out a mortgage 4 years ago with KBC as a company owner/Director. They classed me as a proprietary Director (>25% shareholding, not the >15% that Revenue use to define this), not a regular employee of the company. They looked at the average of my income over three years and I had to provide proof of the viability of the company, in my case we happened to have an investment brief prepared which they were happy with and maybe a copy of the last set of accounts.

It wasn’t particularly onerous, the main issue I had was that my salary had been close to nothing for two of the years they were averaging across, sounds like you might be in a similar predicament. Need to get as much out of bonuses/commissions/expenses and into salary as possible ASAP.
 
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