This Week's Insights 22/07/2019
Ltd Co. Direct Conundrum
What are the key income factors that form the basis for calculating Ltd company director affordability? We have established at least eight including salary, dividends, net retained profit, gross profit, pre and post tax.
Each lender not only has its own approach but often has two sets of rules depending on the directors share holding in the company. We found a Ltd Co. director example where affordability ranged was from £168k to £1.28m and the top and bottom lenders were both mainstream!
Fortunately all you need is a well known accounting certificate and MBT Affordability will take care of the rest!
Is LTV the key?
We all know that LTV can have a massive impact on affordability but it isn't always true. In many cases lenders change their base income multiple at a certain LTV percentage, usually somewhere between 75% and 85%.
NatWest is at the sensitive end of the lender scale and Skipton is at the other end. In one test case we ran we found that Skipton applied the same multiple for anything between 55% and 95% LTV.
Mortgages and More Kids
What is the impact on affordability of a pack of kids? In our test case with five children, a single income and no debt, affordability ranged from £120k to £235k. If your customer has a full house you have to know where to look for affordability.
Got any questions or feedback?
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Remember that MBT Affordability is available for a two week free trial so recommend friends and colleagues to give it a try.
Until next time,