Residential policy
Limited company
Shareholding 25% or more
If the combined shareholding of all applicants is 25% or more, we use the 2-year average of the share of net profit after tax plus director’s salary. If the most recent year is lower, we’ll use that.
Shareholding under 25%
If the combined shareholding of all applicants is under 25%, we treat them as employed.
Eligibility
We need the business to have been trading for 2 years. The financial year end date of the most recent set of accounts must be within the last 21 months (i.e. the company isn’t overdue filing).
We usually need the business to have been profitable in each of the last 2 years and for the net current assets and shareholders’ funds not to have been negative in the most recent year. If this isn’t the case, and there’s strong rationale, please contact us as we may still be able to help.
Sole trader or partnership
Income
For sole traders, and for partnerships we use the 2-year average of their net profit. If the most recent year is lower, we’ll use that.
Eligibility
We need the business to have been trading for 2 years. The financial year end date of the most recent set of SA302s and tax year overviews must be within the last 21 months (i.e. the business isn’t overdue filing).
We usually need the business to have been profitable in each of the last two years. If this isn’t the case, and there’s strong rationale, please contact us as we may still be able to help.
Limited liability partnership (LLP)
Equity partners and profit share recipients
If a member of an LLP is an equity partner or receives profit share as part of their remuneration, we will use their total remuneration, regardless of their % ownership. We use the 2-year average, or if the most recent year is lower, we’ll use that.
We usually need them to have been at the LLP for 2 years (including any time employed). If they haven’t been a member of the LLP for 2 years, please contact us to see how we can help.
Salaried members
Where a partner/member of an LLPs is salaried with no shareholding, we treat them as employed.
Loan to income
The maximum loan to income for an application where any applicant is self employed is 5x. This increases to 5.5x if the application is a remortgage with no additional borrowing up to 85% LTV.
Change of trading entity
It is acceptable for an established business to change trading entity with no minimum trading period for the new entity, (for example, switching from sole trader to limited company), as long as income can be evidenced over 2 years using the old entity or across the old and new entities.
Please note
- We don’t accept any foreign currency income
- If the term extends to or beyond the customer’s declared retirement age or their 71st birthday, view our lending into retirement policy
- For contractor queries, view our contractor policy