question on finance for company director/employee

Discussion in 'Loans & Mortgage Brokers' started by Vertigo, 12th Jul, 2020.

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  1. Vertigo

    Vertigo Well-Known Member

    Joined:
    7th Jul, 2015
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    124
    Location:
    Nsw
    I am the single shareholder and also an employee of my company and am thinking about my next moves.

    I have property but these were bought under an employee capacity many years ago in different circumstances.

    The company is 4 years old and we have been trading very profitably for over 4 years. I am a high-income earner.

    What sort of application will I need to undergo if I want to start purchasing property again in this capacity?

    Will the banks analyze my application solely from the employee capacity? or/and will they take the balance sheet and contracts of the company also into the equation

    thanks
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    18th Jun, 2015
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    Location:
    03 9877 3000
    Being the sole shareholder (and presumably you're a director), you're self employed. Lenders will generally want your personal and business tax returns for the last 2 years (plus a few other things).

    Lender's won't look at the contracts you have. Whilst this might describe the income to be earned, it doesn't say anything about the costs of delivering on those contracts.
     
  3. David R Sutantyo

    David R Sutantyo Well-Known Member

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    2nd Jan, 2020
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    Location:
    Sydney
    Depends on the lender. Most banks will take director's salary + company profit, but ING for example will take your individual tax return ONLY (no CTR) under condition that the company isn't running on a loss.
     
  4. Vertigo

    Vertigo Well-Known Member

    Joined:
    7th Jul, 2015
    Posts:
    124
    Location:
    Nsw
    Thanks for your replies
     
  5. Marty McDonald

    Marty McDonald Mortgage broker Business Member

    Joined:
    22nd Jun, 2015
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    Location:
    Sydney North Shore and Norther beaches
    Many different ways that lenders look at things. . Here are few different ways..

    1) Looks solely at personal incomes paid during the 1 or 2 year assessment period (usually 2). This would be wages and allowances received in the personal tax return along with company dividends actually received. Ignore company profit and any add backs such as depreciation but company needs to show a profit or else loss is deducted from personal incomes. This method is really useful if the company has large debts and pays dividends..

    2) Start at the company level and extract income from there ie net profit before tax + wages paid to you + depreciation + interest addback - P&I loan repayments on company debts = income available to service personal debts. My preferred methodology as indicates true income available.

    3) Personal income ie wages received + company profit but ignore company debts. Limited options.

    4) Low doc! bas statements , accountant declarations etc etc. higher rates.
     

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