Barclays has enhanced its profit after tax (PAT) lending criteria, improving access to mortgages for eligible limited company directors based on a fuller picture of their income and business performance.
Under the new policy, eligibility is no longer dependent on property value. Applicants who meet the income and ownership requirements can now have PAT included in their affordability assessment across a broader range of eligible mortgage applications.
PAT will be assessed in proportion to the applicants’ combined shareholding. For example, where applicants collectively own 60% of a business, up to 60% of its PAT can be considered. If both PAT and dividends are declared from the same business, only PAT will be included to avoid double counting.
To be eligible, applicants must own more than 50% of the company, individually or jointly and have qualifying gross annual income, including the PAT being considered, of at least £75,000 for a sole application or £100,000 for a joint application.
Roland McCormack, head of intermediaries at Barclays, said: “Many limited company directors retain profits to support future growth and investment. That means when it comes to a mortgage application, a standard income assessment might not reflect the full strength of their financial position. Updating our policy means we can more accurately consider a customers’ finances, while maintaining our responsible approach to lending, and ultimately widen access to lending for brokers and their clients.
“This is part of our ongoing commitment to keep listening to brokers, identifying where we can make a meaningful difference and then acting on it – whether that is through our lending policy, technology or the service we provide.”
