Commercial Self-Cert Mortgages
Good accountants will prepare our annual accounts so that we pay as little Income Tax, or Corporation Tax as possible – that’s good isn’t it? After all that’s what we pay them for, right?
Well yes and no.
Obviously no-one takes any pleasure in paying tax; we actually don’t want to pay tax, so accountants do a great job of listing all the allowable expenses, including things we might never have thought of, to reduce the net profit to the minimum and we’re all happy!
However this might not always be the case. While a lower net profit figure helps your save on tax, in other circumstances it is a hindrance.
You see, at some point you might need a mortgage, but this is where lenders will want to see the annual accounts and, as we’ve just discussed, they don’t show much net profit. What would be really good is if the lender didn’t need to see your accounts, but instead just asked the accountant if you could afford the monthly payments. Your accountant knows every detail about your business and your income, so who better to ask? This could be the answer to the predicament.
Well yes it is.
This is basically how a ‘self-cert’ commercial lender works, although they don’t like to call it self-cert these days. What the lender will require is two good proofs of your business and an accountant’s certificate. Of course, you can’t borrow as much as you could if your accounts showed a higher net profit, but this is still a vital service for businesses. You can borrow up to 50% of the property value.
This mortgage facility is available for relatively new businesses, where net profits have not really got going, or for more established businesses. You can raise capital for business injection, or purchase of an additional property, or many other reasons.
The interest rate will be higher than normal, but you can have the mortgage arranged on an interest-only basis and this will help to keep the monthly payments down. It should be regarded as a fairly short term arrangement until your accountant can produce a set of accounts suitable for the mainstream lenders. Then a commercial remortgage can be arranged to get back to lower interest rates.