Starting your own VC-funded business can be terrifying; but taking the leap and achieving your funding goals can make you feel like you’re ready for anything.

Perhaps your next big life goal is home ownership or upsizing from your current home. Maybe you’re looking to move out of rented accommodation; relocate closer to talent that can grow your business further; diversifying your assets by moving your old home into a buy-to-let SPV; or simply just looking for somewhere more comfortable to start your family.

But did you know that owning a VC-funded startup could actually harm your chances of getting mortgage financing?

Unfortunately, many VC startup founders are only finding this out the hard way. Read on to see why lenders are turning down VC founders; and what you can do about it…

What’s the problem?

Residential mortgage lenders are fussy when it comes to limited company owners.

If you happen to own more than 25% in your startup company, most lenders will class you as self-employed. (Some are even more strict, with thresholds as low as 20% or even 10%!)

If you’re drawing a salary via the pay-as-you-earn (PAYE) system, you might assume that lenders will see you as employed, not self-employed. 

Unfortunately, it makes no difference to the lenders. From the moment your ownership share exceeds their threshold, you are self-employed in their eyes.

And that means you’re more risky as a borrower in their eyes, too; since self-employed income is more prone to fluctuate. You’ll usually need to fulfil extra criteria to meet the lender’s affordability criteria and get your mortgage application approved.

Lenders will typically want to see proof that the company has been trading for at least two years, and – crucially – that the company is profitable.

You can already see how this simply doesn’t work for VC startups.

It doesn’t matter how much your company potentially stands to make in the future. Without profits right now, most lenders will simply decline your mortgage application instantly; which can put your dreams of owning a home or upgrading to a larger property on ice indefinitely.

What can VC funders do about it?

Of course, if you’re able to purchase the property with your own cash, you can sidestep the need for a lender entirely; but that’s not a very realistic option for most VC startup founders.

Sadly, lenders aren’t likely to budge.

While some are more flexible with their criteria than others, few are willing to jump into a borrowing agreement where  – on paper, at least – they’re going to lose money.

In fact, when we asked lenders across the market if they’d be interested in a scheme to help VC founders, almost all of them turned us down.

All, that is, except one…

Introducing a new way for VC founders to secure mortgage financing

In partnership with one of our mortgage lender partners, we’re pleased to announce a new exclusive pilot scheme designed specifically for VC startup founders like yourself.

You won’t find it written in any lender policy. This is an exclusive private agreement offer where the lender will take a more holistic approach to assessing your mortgage affordability.

The scheme even enables VC founders to uncover their mortgage eligibility status before embarking on a property search; minimising the risk and potentially saving you a lot of time and money.

In order to apply, your limited company needs to be VC backed with at least one year of trading accounts and a PAYE payroll structure. 

Pre-approval can be secured in as little as 24 to 48 hours. To learn more about our exclusive pilot scheme for VC founders, or to start your pre-assessment process today, book a discovery call with our team via this link today.