At Enness, we work with a lot of self-employed clients as the number of those in this market continues to grow. Although it is common knowledge that the majority of lenders can cater to self-employed individuals, finding the right type of product to suit the client’s specific circumstances can often be very challenging, as often their income stream is not straightforward to evidence.
This was the case with a recent client of mine; a self-employed IT consultant who wanted to remortgage and capital raise on a buy to let property in London. However, this particular scenario was further complicated by my client also wanting to have a transfer of equity to remove his father from the property title and mortgage, as well as consolidating some debt he had accrued.
I had originally talked with my client about a residential mortgage as he wanted a lender who would work from the latest year’s retained profit figures, however I recommended that whilst my client’s search for a new residential home continued, we should release some equity from his buy to let portfolio. By releasing equity from the London buy to let – and removing his father’s name from the property title – my client’s purchasing power would be boosted considerably.
The main obstacle when securing terms for the remortgage, was presented by a very recent blip on my client’s credit report. This meant lenders with automated credit checks would reject his application without a second thought. Further to this, due to the nature of self-employment, my client had high levels of unsecured debt for cash flow reasons.
To overcome any possibility of automatic rejection, I placed the case with a lender who would manually review my client’s credit report. This allowed the lender to understand this credit blip was a one-off occurrence, and not representative of my client’s credit file or account conduct. The manual underwriting also meant that I could pre-empt any questions which may have arisen surrounding his unsecured debt, and explain why and in what capacity he has used this unsecured debt in the past.
By using a manual underwriter, alongside having the ability to talk candidly with the lender, I managed to secure a fantastic 5-year fixed term rate at 3.85% for my client, over a 10-year term. I was also able to refer my client to a solicitor with whom I work regularly, to manage the change in legal ownership on the property title smoothly.