Retained Earnings – how can this affect my mortgage application ?
When applying for a mortgage, lenders will consider a number of factors, including your income, your outgoings, and the value of the property you are buying. For company directors, lenders will also look at the company’s financial performance, including its retained earnings.
Retained earnings are the profits that a company makes after it has paid all its expenses and taxes. These profits can be reinvested in the business, used to pay dividends to shareholders, or used to repay debt.
If you are a company director, and you are applying for a mortgage, lenders will want to see that your company has a healthy balance sheet and that it is making a profit. They will also want to see that you have a good track record of managing the company’s finances.
If your company has a high level of retained earnings, this can be a positive factor in your mortgage application. Lenders will see this as evidence that your company is financially stable and that you have the ability to repay your mortgage.
However, it is important to note that not all lenders will consider retained earnings when assessing a mortgage application. Some lenders will only consider your personal income and outgoings.
If you are a company director and you are thinking about applying for a mortgage, it is important to speak to a mortgage broker. A mortgage broker can help you to understand the different lenders’ criteria and can find the best mortgage for your individual circumstances.
Here are some additional tips for company directors who are applying for a mortgage:
Make sure you have a good credit score.
Get your company’s financial statements in order.
Be prepared to provide evidence of your income and outgoings.
Speak to a mortgage broker who specializes in lending to company directors.