DGA mortgage: what are the options?

DGA mortgage a challenge? Many people think that getting a mortgage as a (starting) entrepreneur with a BV or NV is impossible or a lot of hassle. That is incorrect and not correct. When you have good administration and your affairs in order, it is possible to qualify for a mortgage without ‘hassle’.

You can also contact us as a starting shareholder without annual figures. If you have been working as a DGA for at least 6 months and practiced the same profession as an employee, you can simply get a mortgage with Bliss.

Many banks and mortgage advisers do not understand the cash flows and income of a DGA entrepreneur. This ensures that many DGAs get a lower mortgage or end up with an unjustified rejection from the lender.

In this article we list your chances, how it is possible to increase the chance of success and which documents you need for your mortgage application.

What exactly is a director-majority shareholder (DGA)?

In this article we mean the VPB entrepreneur by a director-major shareholder (DGA). An entrepreneur with a substantial interest in box2. As a DGA, you can legally have a private limited company (BV) or limited liability company (NV), but often a structure with multiple legal entities and different legal forms is also very possible. Doing business or investing with the help of a BV has many advantages. Setting up a company can now be done easily and cheaply. Many accountants and bookkeepers regularly speak about the adage: one BV is not a BV. Entrepreneurs with several BVs and more complex structures are therefore increasingly common.

In principle, you can use the principles and rules of the game in this article for all these legal forms. It is important to know and take into account that every situation is different. Please contact us to discuss your personal situation.

Are you a self-employed person, do you have a sole proprietorship or will you soon start as a freelancer?
Read our article about the self-employed mortgage (zzp).

DGA (director-major shareholder) within a BV or a NV (public limited company)? Then there is more to your mortgage application. In that case, make an appointment with one of our advisors for more information and tailor-made advice.

Opportunities for DGA entrepreneurs

When people in paid employment apply for a mortgage, the bank only looks at the pay slip and the employer statement of the person. Unfortunately, this is not so simple for the DGA, because the director himself has influence on the amount of the salary. On the one hand, as an employee you are indeed employed by your own company. On the other hand, you are an entrepreneur. And the profit you make as an entrepreneur can be different every month. This means that as a DGA with a variable income, you belong to a ‘risk group’ when it comes to your mortgage.

Many entrepreneurs think that they can only get a mortgage after three financial years as a DGA. Three years of accumulated history makes it in most cases a lot easier to determine business income, but even after only one or two financial years you can get a mortgage with a good substantiation from a number of lenders.

For example, there are lenders that take excess profit from your holding company and/or participations. Also, there are banks that will accept a forecast of earnings in addition to your first two fiscal years. Want to count more heavily in the last year, for example 3 times. Or lenders that charge with a percentage of your profit from your first or second financial year.

Another approach is to considerably increase your chances of financing your dream home (and considerably reduce your mortgage stress) by paying off the current account considerably or repaying it by paying out profits. Another option is to invest your own money and have clear annual accounts (preferably drawn up by a bookkeeper or accountant) available.

Required documents DGA mortgage

In addition to the ‘normal’ required documents, you will need a number of additional documents for the mortgage application as a DGA. In most situations, these are the following pieces:

• December salary slips for the past three years. Please note no annual statement.
• Income tax returns for the last three years;
• Definitive annual figures for the last three years (although the information from the income tax return is often sufficient for small companies);
• If you have been working as a DGA for less than three years or if you are a fast-growing entrepreneur, you can add a forecast from an accountant. This then functions as a kind of estimate of your future income.
• Extract of Trade Register Chamber of Commerce (Kamer van Koophandel(KvK)). Chamber of Commerce registration (maximum four months old) is official proof of registration in the Trade Register;
• Organogram;
• Possible dividend policy and/or AGM minutes;
• Possible management fee agreement;
• Possible current account agreement.

Consolidated annual figures are sometimes necessary to gain better insight than is possible with separate annual accounts. By means of a consolidated financial statement, it is possible to look through a participation structure by presenting a combination of the whole. Mutual transactions are eliminated to avoid double transactions and counting. Consolidated figures are needed when there are legal entities that are controlled by the parent company. We then have the scope of consolidation and it seems to be one company.

Test income DGA mortgage

Your so-called test income is determined on the basis of these documents together. This can be determined by your advisor Bliss or by an external party if necessary). Based on the test income, it is then calculated for what amount you can apply for a responsible, maximum DGA mortgage.

It is more difficult to determine the test income compared to the IS entrepreneur. In addition, as a DGA you will have to deal with specific rules for determining your stable income for a mortgage. Because your income arises from multiple cash flows and depends on various factors, it is more difficult to determine than that of entrepreneurs with a sole proprietorship or general partnership. Most banks look at the DGA salary of approximately € 46,000 as standard. While your total income may consist of more components:

Different components of DGA income

• DGA wage / DGA salary that you are remunerated from the BV or holding company;
• Dividend that you pay yourself from the BV or holding;
• Dividend that is in the BV or holding company;
• Excess profit that is in the BV or holding company.

Also pay attention to the following points:

• Income is normally calculated on the average of the last three years. The past is standardly looked at to determine a stable income and to make an expectation for the future;
• Is the company able to ‘take a hit’ and do the key figures show whether the company is sufficiently healthy?
• Can the company meet its short-term and long-term obligations?
• Do you have the most shares and control in your BV? Your excess profit can only be included if you not only own at least 5% of the shares, but also have the most control in your company.
• Most DGAs have a current account management debt. When determining a responsible mortgage, both the amount and the affordability are taken into account. With an interest-bearing loan agreement on the current account, it is important to know what the charges are.
• Have you been an entrepreneur for less than three years? Then most lenders take a discount from your figures in order to calculate more safely. A percentage of your taxable profit balance is charged. For example, in one year of entrepreneurship this is 70% and in two years 85%. However, some lenders also work with 100% of the average of the years in which the company is active. This differs per lender.
• Have you earned less than your average income in the past year? In that case, this last year will be used as the test income.
• The current financial year is included in the assessment. Depending on the time of your application, you will therefore have to submit half-year figures for the application for your mortgage. Your current income must therefore be in line with your average income. It is checked whether the trend continues or whether there is perhaps a trend break.

The required documents and the amount of your assessment income always depend on your own personal situation and wishes. Do you have your own resources and do you want to contribute this money to the mortgage construction? Do you or do you not have a partner with a permanent job? What is the income security of your profession and what is your educational background? Can you return to permanent employment with an employer? It all plays a part in your mortgage application. It is therefore wise as an entrepreneur to always check with your mortgage advisor.

DGA Mortgage with NHG

Would you like to take out a mortgage with National Mortgage Guarantee (NHG)? In addition to the above documents, you also need a so-called Income Statement Entrepreneur. From 2019, this is even mandatory for a mortgage with NHG. You are also eligible for this if you have only been working as a self-employed person without staff for one year.

In the case of a private company or limited liability company in which the person (whether or not together with the spouse/registered partner has more than 5% direct or indirect shareholding or control), an Entrepreneur Income Statement is required when applying with NHG.

With an Entrepreneur’s Income Statement, your test income is determined on the basis of your average income of the last three calendar years. If you have been an entrepreneur for less than three years, there are options.

You can have such an Entrepreneurial Income Statement drawn up by one of the following calculation experts:

• Overviewz in Barneveld
• Raadhuys Tax Legal Accounting in The Hague
• Pentrax advice in Nijmegen
• Business income in Nieuwegein

Please note: the Entrepreneur’s Income Statement is valid for six months. It is therefore wise not to request the document too early when applying for financing.

 Good opportunities in practice for directors with many shares in the BV

As Bliss, we are happy with these extra options for DGAs. We speak daily with entrepreneurs, most of whom have often been active for less than three years. Yet many entrepreneurs with a BV or NV already manage to earn a good income in a short time, a lot more than if they could earn as an employee. The development that more and more lenders and the Home Ownership Guarantee Fund are responding to the growth in the number of entrepreneurs and the capacity to realize an excellent income in a short term is a good step forward for the group of highly educated self-employed.

Would you like to know what opportunities you have as an independent entrepreneur in the mortgage world? Contact us for an appointment when it suits you, for example during the day, in the evening or at the weekend and let us advise you without obligation . We have extensive experience with customization and are happy to think along with you!

Schedule your no-obligation call now