Using complex income to obtain a mortgage for clients purchasing their rented property
What was the situation?
I was approached by a couple looking to purchase their first home together. It was the property they were currently renting, which their landlord had offered to sell to them.
One applicant had recently moved from full time employment to self-employment, and the second was the CEO of a start-up company, which was founded in London but had been acquired by a US firm.
The property they were purchasing was located in North West London. They were looking to borrow 85% LTV on £700,000.
What was the issue?
The biggest issue to overcome with this application was their income. The client whose start-up had been acquired, had a large percentage of shares in the US parent company. Typically, lenders would look to treat this income structure as self-employed rather than employed, however the US firm did not have accounts submitted due to their recent formation, so we were unable to provide the typical evidence of income. I needed to find a lender who was happy to accept the complex PAYE structure, whilst being comfortable with their shareholding in the parent company.
What was the process?
I was able to find a lender who was happy to accept the client’s complex PAYE structure whilst being comfortable with their shareholding in the US parent company. The lender was also able to use a portion of the other client’s self-employed income to satisfy their affordability criteria.
During the application process it came to light that one of the clients also had a default registered on their credit file, which they were not aware of. This would normally be outside of the lender’s policy, but they were willing to proceed with this as an exception.
What was the solution?
The clients had initially feared that they might have to move out of the home they loved with little notice, and would not be able to find another property that would fit their requirements within the location they lived in. However, by leveraging my relationship with my contacts at the lender, they were able to start their home ownership journey by buying the flat they had dreamt of owning.
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