The same business debt can affect your personal borrowing capacity differently under different lenders’ methods. Some policies require every business liability to be included or expensed against you personally; others can exclude certain company liabilities where the business is demonstrably profitable and self-supporting. A company debt is not automatically ignored, and it’s not automatically counted against you personally either.
The questions that actually decide it
- Who legally owes the debt, you personally, or the company/trust?
- Is the business genuinely servicing the commitment from its own income, independent of you?
- Is company profit being relied on for the home loan application at all?
- What is your ownership/shareholding in the entity?
- Is the commitment being refinanced as part of this transaction?
Why entity structure matters
A sole trader’s business debts and personal debts are, legally, the same debts, there’s no separation to argue about. A company or trust structure introduces a genuine legal distinction, which is exactly why lender policy varies here: some methods look through the entity to the individual’s exposure; others accept the entity’s own servicing capacity as sufficient, provided the business is clearly profitable and self-supporting.
What to prepare
- A list of all business liabilities, including the entity that legally owes each one
- Evidence the business is servicing its own debts from its own income (bank statements showing the repayments)
- Your ownership/shareholding structure
- Company/trust financial statements, separate from your personal position
Next step: see the business-debt questions in the Scenario Lens‘s Self-employed tab, then talk with KartikKumar about how your specific entity structure and liabilities are likely to be treated.