£830,000 mortgage for business owner following growth of own firm

What was the situation?

I was recently approached by an individual who was looking to purchase a large family home in the Hertfordshire to make their forever home. With an offer accepted at almost £1 million, the client was keen to progress quickly and secure a mortgage for almost £830,000.

The client themselves was part of the founding team that set up a limited company a few years ago. The business had recently undergone a period of growth with further plans to expand. As such, it was their priority to keep as much money within the business as possible to fund their planned expansion, and as such the client had not been taking out as much as they could in salary and dividends.

What was the issue?

Upon speaking to me, the client advised that they had already approached their bank directly. The bank confirmed that they would assess the client’s income using their modest salary & dividends. Furthermore, they would also factor existing credit balances that were built up during the renovation of the client’s existing property, despite the client’s intention to clear these from the proceeds of the sale. This resulted in the bank confirming that they would lend much less than what the client required.

As this was not suitable for the client, they began to explore their options and got in touch with me to help.

What was the process?

By thoroughly looking through the client’s financial accounts, it was clear that the business was very profitable and there were good levels of net profits within the business. In order to demonstrate affordability, it was clear that we needed to use the latest set of figures in its entirety to get the borrowing required, rather than averaging the last 2 years despite this being common practice with most lenders.

Due to my experience of working with clients in similar situations, it was clear that the success of securing finance would be down to how it was presented to a lender. I needed to present the case in a way whereby the merits of the application had been suitably highlighted, with supporting documents from the company accountant to provide the lender with necessary comfort that the business will continue to go from strength to strength.

Knowing that this application would need a lender who would take the time to process the detail and apply a common-sense, pragmatic approach in underwriting the case, I was able to present the full application to a senior underwriter and obtain pre-approval. This meant that we could act fast once the application was submitted.

What was the solution?

In assessing the case, the lender was able to work off the affordability from the clients’ share of the net profits of the business, prior to corporation tax. Furthermore, they agreed to assess the latest years accounts in isolation, as opposed to working off a 2-year average, which boosted the income figure.

Finally, they were able to disregard the credit commitments that would be cleared following the sale of the existing property, which boosted the affordability stress test and increased the loan amount the client could get.

I was able to secure a fixed rate product at just over 3%, on 85% loan to value (LTV). This provided sufficient funding for the client to purchase their dream property and preserve enough cash to apply their own touch, allowing to make it their forever home.

Lending solutions with LDN Finance

Are you looking to purchase your dream property? Perhaps you have a complex income structure also? We’re here to help you find a solution – no matter how complex your circumstances. At LDN Finance, our expert brokers have extensive experience in providing creative solutions to secure large loans for our clients.

We work closely with our trusted network of private banks and both high street and specialist lenders to arrange bespoke mortgage arrangements to suit your circumstances at competitive, market-leading rates. 

Get in touch with us to organise an initial consultation.