I’ve been working with a client for many years who works in education and owns her own business. Her main residence is currently valued at £1.5 million and had a £700,000 mortgage on it when she contacted me again.
The client had recently changed the way she was paid for taxation purposes and consequently was drawing a much smaller salary from the company. This not only meant that her income was dramatically reduced but that the structure in which it was paid was altered as it was now also formed of directors’ loan payments for tax efficiency.
Due to these changes and because she wished to invest the capital into the expansion of her business, my client was keen to increase her borrowing to a £1 million mortgage and needed a self employed director mortgage. In line with the change of her income I didn’t initially think that I would be able to make this deal happen. This is because directors’ loans aren’t typically considered as income by lenders.
However, I did in fact source one private bank that were comfortable with supporting a strong, growing business when I presented them my client’s successes to date. Consequently, they agreed to lend a new loan which was just under 4 x her director’s loan income.
The rate that we finalised upon was a three year fixed at 3.3% for £700,000. The remaining £300,000 was set at 2.4% variable with the plan to reduce it over the next few years. There were also to be no exit charges as an added perk.
This large mortgage solution was a mixture of capital interest and interest-only which suited my client’s needs perfectly.