Self employed mortgage

April1234

Has anyone any of experience of being a company director (not taking a wage) and also being a PAYE worker (separate from own company) when applying for a mortgage.

Will 3 years of accounts be required for the mortgage application if taking no wages?

Citrus_8

https://www.boards.ie/discussion/2058308762/self-employed-mortgage

Would this be an application for a mortgage to yourself as an individual or to the business? If individual, then apply with your PAYE income, so it's a 6 months bank statements. Don't know if being a director of the incorporated entity could potentially require some additional papers, but you said don't have a salary out of that entity. If you're a director of the company, then that is not a self-employment. Sole traders would be self-employed, but that is not a company, rather just a business. As a director, you should know the basics of understanding the sole trader business vs incorporated entity. So need more clarity.

SureYWouldntYa

https://www.boards.ie/discussion/comment/120969836#Comment_120969836

You're still registered for Income Tax if you're a proprietary director and file a Form 11 with Revenue

OP - You likely will be asked to provide the financial statements, and for at least 2 if not 3 years, these would need to be certified accounts from an accountant in practice and full financial statements rather than the abridged set

Citrus_8

https://www.boards.ie/discussion/comment/120972866#Comment_120972866

The first part of your comment make sense, but could you clarify please why would the OP need accounts of an Ltd? My understanding is that this would be required for sole trader while Ltd employees are PAYE so payslips as usual with a 6 months personal account statement. I don't remember if directors of Ltd are actually treated same as PAYE, hence my question :)

SureYWouldntYa

https://www.boards.ie/discussion/comment/120973398#Comment_120973398

The company will either be an asset or a liability to the person applying for the mortgage. If it's making money but he just hasn't taken a salary from it, there's money there for him to draw on if needed. If the company is making losses that are financed by the director and this is ongoing it would have an effect on the ability to repay the mortgage.

Citrus_8

https://www.boards.ie/discussion/comment/120974035#Comment_120974035

Em, correct me if I'm wrong, but drawings are only for sole trader. You can't draw money from a company - that is done by either payslip as a salary or via the dividends. And salary is not being taken (again, sole traders do that as an income, but in the company you don't take out anything as you are an employee of your own business).

I agree that a company can be used as an asset for a mortgage purpose, however, I'm not knowledgeable enough on this part.

If a company making losses, it is financed by shareholders or investors, not necessarily director. In this case we can assume it would be a director as per OP.

Can you clarify, when a person is taking a mortgage (it is not specified by the OP, either for personal or business purposes), my understanding that a bank would be interested to see a) only PAYE income if a mortgage is for personal reasons, b) PAYE and company's books if a mortgage is for the business.

adrianw

https://www.boards.ie/discussion/comment/120974108#Comment_120974108

From reading the initial post I think it is safe to assume the OP means the company is his/her own. I definitely read it the same way SureYwouldntYa read it.

Also with regards to SureYwouldntYa comment about being able to draw on excess funds if required - he/she didn't say drawings. I think most people knew what he/she meant.

However to answer the question - all banks I have ever dealt with when a proprietary director applies for a mortgage in a personal capacity have always asked for financial statements for the company irrespective of whether or not the director takes a salary.

Citrus_8

https://www.boards.ie/discussion/comment/120976299#Comment_120976299

Interesting (the last part). Thanks!