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  • Mortgages & Finance

    Increased income due to S24 = borrow more?

    Due to S24 I will pay more and more tax because my expenses are going to be reduced and this will put my bottom line fig up

    My question is this If I was applying for a Loan or a Mortgage for my personal use would the Higher profit fig be used for the New Mortgage?

    Ie my profit has gone up so can I borrow more on a residential mortgage?

    I must add I have no intention of moving home I am happy where I am

    Just the thought crossed my mind ....

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    From my understanding, your mortgage loan size will be based on your disposable income ie. Whatever is left they can service the loan interest.

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    If you are a portfolio landlord it will be taken into account but my experience is this is a secondary not primary consideration.

    if you looked at private banks then yes they would consider it more but these are niche lenders which are unlikely to apply.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Your new declared income will be taken into consideration (lenders generally average the last few years where there has been an increase) and then it will be down to the 'affordability' process to establish your level of borrowing.

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    You can contact me via Direct Message, or 07788 219647 or call the team on 01206 654444 for personalised quote and advice

    Hi there

    In short – yes, lenders that use net profit will use whatever is declared on the application (backed up by HMRC tax calculations etc).  What they want to see is your ‘net profit before tax’, in other words your earnings after expenses have been deducted. So if your income remains the same, but your claimable expenses drop, then your net profit before tax should increase by the same amount. 

    Even though you have no plans to move you might simply be able to remortgage to a better deal and/or borrow a bit more for a project like a buy to let or home improvements – so it might still come in handy perhaps.

    I hope that helps,

    Cat

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    Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk


    I thought that would be the case

    how daft is that

    it’s just a paper gain

    less cash in reality

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    It does seem daft from our perspective as the public and brokers.  Lenders have to think differently.  Often their perspective makes things more difficult for us/borrowers but in this case it actually works in your favour! 

    As they are lending to both employed and self-employed lenders want to try and treat each the same and we all know they take the gross salary for the employed and work with that. 

    For the self-employed the net profit before tax is the closest they can get to an employed person’s salary.  For limited company directors they tend to go for salary plus dividends. 

    It is an ongoing challenge!

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    Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk