Barclays has widened its mortgage affordability criteria for limited company directors by expanding the circumstances in which it will consider Profit After Tax.

The lender has removed the property-value restriction previously attached to its PAT criteria, meaning eligible directors can now have retained profits considered across a broader range of mortgage applications.

Applicants must own more than 50% of the company, either individually or jointly.

They must also 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.

RETAINED PROFITS

PAT will be assessed in proportion to the applicants’ combined shareholding.

For example, where applicants collectively own 60% of a company, Barclays can consider up to 60% of its PAT when assessing affordability.

Where both PAT and dividends are declared from the same business, only PAT will be included to avoid double counting.

The lender said the change should provide a fuller assessment of income for company directors who retain profits within their businesses rather than taking them as dividends.

‘FULL STRENGTH’ OF FINANCES

Roland McCormack (main picture), 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.”