You would have thought that this was not a big issue.
Stop being a sole trader on Friday and open up your limited company on the Monday. Nothing has changed.
Still doing the same job
Still have the same contracts
Still have the same income
Work from the same premises
Same accountant
Well, a great number of lenders see it differently notwithstanding the fact that you have not changed jobs.
Remember that for self employed and those with greater than 20% shareholding lenders will generally want at least two years individual tax calculations before they will consider you for a mortgage. There are very few lenders that will take one year's income.
A great many lenders take the view that this is a brand new entity where you cannot use your historic self employed income to go towards the requirements for affordability. This means that if you are thinking of buying a new home and incorporating your business then you may run into problems.
As with many things timing is everything and you should maybe postpone the incorporation of the company to allow you to be able to utilise the whole of the market to get your mortgage. If you are hell bent on doing it all at the same time then you need to speak to a broker to see if they can find a lender who will play ball and allow you to use your historic self employed income to bolster the dividend and salary income to get that mortgage for you. If you do decide to go ahead then the pool of lenders that you can look at will be greatly diminished and this may affect the rate that you can get.
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