Retained Profit Mortgage

The definitive guide to getting a Retained profit mortgage.

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What Is A Retained Profit Mortgage?

If you are a company director you may not want to draw down all of your company’s funds to your personal account. There are lots of reasons that you might not withdraw all the company’s funds. However, most lenders will only take into consideration your personal income. This can provide a problem, your company may have made £250,000 last year, but if you only paid yourself £50,000 most lenders will only lend you based on that income.

However some lenders will allow you to use your share of the companies retained profits. This may mean you can borrow a lot more, whilst not withdrawing the funds needlessly from your company. This is a retained profit mortgage, some lenders will lend to you on the retained profit in the company. And why wouldn’t they? You could withdraw that money if you wanted to.

Can I Get A Retained Profit Mortgage?

Whether you can get a retained profit mortgage will largely depend on your entire situation. However if you own over 25% of your business you should be eligible. Speak to a specialist mortgage advisor to see if your situation would fit the criteria of a retained profit mortgage.

Retained Profit Mortgage With Bad Credit

If you have a bad credit history you may struggle to get a mortgage in general. But if you are wanting to get a retained profit mortgage it will be even harder. There are only a handful of lenders that offer this type of mortgage, and therefore the chances that you can fit with them and their bad credit criteria is slim. However depending on how long ago it was, what it was for and how much it was you may have options.

If you have bad credit history we always recommend you first check your credit history with a credit reference agency such as Checkmyfile. Once you have this information a specialist mortgage advisor should be able to help you.

Can A First Time Buyer Get A Retained Profit Mortgage?

Absolutely. As long as you fit the other criteria of the lenders you should still be able to get a retained profit mortgage. You should be able to do this with a relatively small deposit. We have several articles on First time buyers and getting a mortgage when you are self employed.

5 tips for getting a retained profit mortgage

  1. Have an accountant prepare your accounts – Lenders prefer accounts provided by a chartered accountant.
  2. Speak to a qualified mortgage advisor. Having your application placed with the right lender and packaged correctly is key to getting a retained profit mortgage.
  3. Check your credit history. Lenders criteria for bad credit can be strict, so always check your credit report before considering a mortgage.
  4. Get your business bank accounts and personal accounts neat. Lenders like when your bank accounts are straight forward, but if they’re not, don’t worry too much.
  5. Find out how much you can borrow and get a mortgage in principle before you go house hunting. Speaking to a qualified advisor will tick both these off. They can find out how much you can borrow and get you a mortgage in principle with the right lender for your situation.

Got a question we haven’t answered? Check our Company director page, still no luck? Get in touch.

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