Residential policy
Limited company
Shareholding 20% or more
If an applicant’s shareholding is 20% or more, we use the 2 year average of the share of Net Profit After Tax + Director’s Salary. If the most recent year is lower, we’ll use that.
Shareholding under 20%
If an applicant’s shareholding is under 20%, we treat them as employed.
Eligibility
We need the business to have been trading for 2 years, with the most recent set of accounts to be in date, and for there not to have been a loss or negative net worth (negative shareholders’ funds) in either of the last two years.
If the loan is over £1m, the business must have been trading for 3 years.
If any of these requirements is not met but there is strong reasoning as to the merits of the case, please contact us to see if we can help.
Sole trader or partnership
Ownership 20% or more
For sole traders, and for partnerships where an applicant owns 20% or more, we use the 2 year average of their Net Profit. If the most recent year is lower, we’ll use that.
Ownership under 20%
If an applicant owns under 20% of a partnership, we treat them as employed.
Eligibility
We need the business to have been trading for 2 years, with the most recent set of accounts to be in date, and for there not to have been a loss in either of the last two years.
If the loan is over £1m, the business must have been trading for 3 years.
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 4.49x. This increases to 5.5x if the application is a remortgage with no additional borrowing up to 85% LTV.
Change of trading entity
Where an established business has changed its trading entity (for example, the business has switched from sole trader to limited company) this is acceptable with no minimum trading period for the new entity, 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 beyond the customer’s declared retirement date or their 68th birthday, view our lending into retirement policy
- For contractor queries, view our contractor policy