Business Bank Account & Mortgage

[Daleuk]

Hi All

Ok so im taking on my first ever contract, moving from a permy role.

So far iv setup my Ltd company and appointed a good contractor accountancy. My query relates to Business Banking and keeping those finances separate from my personal ones.

Personally I bank with HSBC and have a mortgage with Santander. I have the choices between Cater Allen, Santander and HSBC for my business account.

Will establishing a Business Account with Santander (or Cater Allen, as a sister company) alarm them with regards to my mortgage?

I have another full year on the rate for my mortgage and do not intend on switching till then. When im sure that I may have a little trouble on proving income etc and have a more limited range of products to choose from.

Many thanks for your opinions and advice.

[northernladuk]

Why would having a business account have anything to do with your personal mortgage whatsoever? One is to do with you, the other is to do with a business. They couldn't be more separate even if they are with the same provider.

Proving income is easy, you just prove your permie income for as long as you can and they get them to speak to your accountant to prove your income from LTD. THey as for 2 or 3 years filed accounts but it doesn't really matter if you haven't got that many, they just take your permie details from before then.

One word of caution though..... If you intend to keep your income from your LTD below any tax thresholds then you are also limiting your income for most mortgages purposes. There are specialist products that will lend against your daily rate or profit left in your account or some jiggery pokery but most high street lenders will take your income only. If you are keeping it low to avoid tax you could be affecting your ability to get a higher mortgage.

[Daleuk]

Yes the mortgage product I currently have is based on a £40k permy and within the Ltd company id be keeping it to the personal tax free threshold, the rest paid in dividends.

So in 1 years time, when im out of my discounted period, ill be looking for a fresh deal. I wont have a high enough PAYE for my borrowing and only 1 years accounts. So would have to look for a specialist contractor mortgage?

I was reading your post on here (http://forums.contractoruk.com/accou...-mortgage.html), about dividends being a recognised income for most lenders.

Thanks for your help.

[sm02fly]

I have business accounts with HSBC and Cater Allen. Personally I bank with Santander and HSBC

Both are good, Cater Allen call centres are UK based and very helpful. Will automatically upload statements into Crunch every week or so. Setup the account via CUK or Crunch and you will not have to keep £5k in the account to avoid fees. Main downside is that no transfers get sent till the next business day (so no service like Faster Payments). Internet Banking is a little clunky, but OK.

HSBC- I have only spoken to their call centre when setting up the account, but it was UK based. Transfers usually run instantly. Depending on the account, you should have the option to setup a 'Business Money Manager' account which pays slightly more interest than the typical current accounts. If nothing else, it is a quick and easy way to separate your CT and VAT from your day to day business expense account. The internet banking is basically identical to the personal side. Assuming you went through with Crunch for your accountants, you can upload a CSV statement with no editing, so still very easy.

Based on the above, I now run nearly all transactions through the HSBC accounts.

[northernladuk]

Yes the mortgage product I currently have is based on a £40k permy and within the Ltd company id be keeping it to the personal tax free threshold, the rest paid in dividends.

So in 1 years time, when im out of my discounted period, ill be looking for a fresh deal. I wont have a high enough PAYE for my borrowing and only 1 years accounts. So would have to look for a specialist contractor mortgage?

I was reading your post on here (http://forums.contractoruk.com/accou...-mortgage.html), about dividends being a recognised income for most lenders.

Thanks for your help.

Sorry I might not have been clear. When they ask you for your income that will be salary, dividend, rental income. Everything that you are taxed against so yes dividends are included. It's income just like salary is.

You will probably be able to get a bigger mortgage from your div income as your salary is 40K gross, your first year accounts will probably show 40k net (I forget the exact threshold figures). Are you sure that still means you can't get your mortgage? You can pull more than the 40K out of the business allowing you a better offer but you will pay the extra tax on it.

Wouldn't do any harm to have an affordability check down now using the numbers you will have in a year if that makes sense. Tell them you have a year of accounts at 40k and previous year permie and see how much they will lend you just to get an idea about what you need to divi yourself for the coming year. You can give yourself a big divi at the end if you are short.

Might be worth speaking your accountant about this as well. He will be able to guide you through what to do, particularly with you being part way through the year. He can then balance the tax v need for mortgage when he advises you how much to divi yourself for the rest of the year.

Just a note he should also have advised you not to pay yourself a salary from the LTD as you have probably used your allowance up from permie land?

Little tip for when you are starting. Use your accountant at any opportunity. A good accountant can save you money. Feel free to look on here and ask out of interest but always consult him. Many of us have been on here years and still find something new or still need to check.

[Daleuk]

I have business accounts with HSBC and Cater Allen. Personally I bank with Santander and HSBC

Both are good, Cater Allen call centres are UK based and very helpful. Will automatically upload statements into Crunch every week or so. Setup the account via CUK or Crunch and you will not have to keep £5k in the account to avoid fees. Main downside is that no transfers get sent till the next business day (so no service like Faster Payments). Internet Banking is a little clunky, but OK.

HSBC- I have only spoken to their call centre when setting up the account, but it was UK based. Transfers usually run instantly. Depending on the account, you should have the option to setup a 'Business Money Manager' account which pays slightly more interest than the typical current accounts. If nothing else, it is a quick and easy way to separate your CT and VAT from your day to day business expense account. The internet banking is basically identical to the personal side. Assuming you went through with Crunch for your accountants, you can upload a CSV statement with no editing, so still very easy.

Based on the above, I now run nearly all transactions through the HSBC accounts.

hey thanks for that!

oh and ps you will be getting the Amazon vouchers

So the auto link feather that Crunch have setup with Cater Allen, isnt worth it? just as easy with HSBC and CSV files? I assume as simple as download and upload to Crunch, rather than Crunch having a direct link.

so advise is go with HSBC! (from what I can see is also free banking and no minimal amounts etc)

[sm02fly]

Basically yes.

I think Crunch are testing HSBC integration via a 3rd party, so should be coming. The CA auto upload works fine, but the additional effort of locating where to download the csv from HSBC then uploading it is more than compensated by the near instant transfers in my opinion.

With HSBC you need to explicitly request a debit card in the application paperwork they send out, just requesting it over the phone when you apply is not enough (so I found out) but was easily sorted. HSBC also use the RSA style tokens for you to login (still needed on the iPhone account app too which is a little annoying).

[psychocandy]

Hi All

Ok so im taking on my first ever contract, moving from a permy role.

So far iv setup my Ltd company and appointed a good contractor accountancy. My query relates to Business Banking and keeping those finances separate from my personal ones.

Personally I bank with HSBC and have a mortgage with Santander. I have the choices between Cater Allen, Santander and HSBC for my business account.

Will establishing a Business Account with Santander (or Cater Allen, as a sister company) alarm them with regards to my mortgage?

I have another full year on the rate for my mortgage and do not intend on switching till then. When im sure that I may have a little trouble on proving income etc and have a more limited range of products to choose from.

Many thanks for your opinions and advice.

Good luck with getting a remortgage sorted after only one year contracting. You can forget the traditional lenders - no chance.

Its gonna have to be specialist but even then not sure how you're going to fare after just one year....

[northernladuk]

Good luck with getting a remortgage sorted after only one year contracting. You can forget the traditional lenders - no chance.

Its gonna have to be specialist but even then not sure how you're going to fare after just one year....

I don't think this is true any more. I have had agreement in principle while only having 18 months accounts. I mentioned my situation and they just asked if I had an accountant and I gave them his details and they contact him. Standard process now. They are also happy to take 1 year LTD accounts and just use the permie figures before that. Didn't have a problem. To be fair I didn't go past the In Principle offer but they didn't bat an eye lid. I think it was Halifax at the time.

Also when I applied for one last week I hesitated when they said two years accounts and she quickly said it doesn't matter though, we can work it out so indicates it wasn't a stopper again.

[psychocandy]

I don't think this is true any more. I have had agreement in principle while only having 18 months accounts. I mentioned my situation and they just asked if I had an accountant and I gave them his details and they contact him. Standard process now. They are also happy to take 1 year LTD accounts and just use the permie figures before that. Didn't have a problem. To be fair I didn't go past the In Principle offer but they didn't bat an eye lid. I think it was Halifax at the time.

Also when I applied for one last week I hesitated when they said two years accounts and she quickly said it doesn't matter though, we can work it out so indicates it wasn't a stopper again.

Surprised. I asked for additional borrowing about 6 months ago with RBS.
This was just £10K extra on top of £120K outstanding when house is worth about £220K or so.

They said no chance until you're almost at 2 years.