Matthew and Karin contacted me in early 2020. They were currently living in rented accommodation despite having both previously been homeowners. Following divorce and remarriage, they had pulled together a 10% deposit, and planned to buy their ideal a 5-bed detached home with a purchase price of £499,000. However, having a business does not mean an easy Mortgage.
They had unfortunately had a disappointing result from another Mortgage Broker, having been let down by the chosen lender based on affordability and the broker had run out of options. Friends of theirs had recently been helped by me so in desperation they called.
The problem that we had to solve
Matthew, Karin, and I met and went through a full and complete discussion to fully understand the facts, and their objectives. Matthew is a 33% shareholder and director of a successful Limited Company. However, during these initial conversations and crunching the numbers, it became clear that by using Matthew’s salary and dividends just would not stack up. Having a business does not mean an easy Mortgage.
Solving the problem by knowing the lenders
I then contacted Matthew’s accountant and went through the last 3 years business accounts with him. The company has good profits, and Matthew’s share of those profits were greater than his dividends. First I shortlisted the lenders that would use ‘share of net profit plus salary’ instead of salary plus dividends. There were only a small handful of lenders, but only one that was offering 90% loan-to value mortgages. I calculated the affordability, spoke with the lender’s underwriters, completed an Application in Principle and the result was success. Limited Company Mortgages North Devon – Aspire Financial Services (aspirefs.co.uk)
All clients are different and so are the lenders. We must approach each one with an open mind and ask all the questions to get a full understanding of the client’s position. Using that information, is the skill that matches the needs and circumstances of the client to the most appropriate lender. Matthew and Karin are now happily in their new home, together with their five children. There are many mortgage products so for further information go to Types of mortgage – Money Advice Service