I recently secured a self employed mortgage at 80% loan to value for a client whose business had been through some ups and downs in recent years.
I was approached by a client who was looking to purchase a new family home, well located in central London. The property was valued at £800,000, and he wanted an 80% loan to value mortgage.
The first difficulty was that the client was self employed. He was a shareholder in a consultancy company set up as an LLP; he owned 96%, and his wife owned the other 4%. Generally, lenders look at company accounts from the past two or three years, and take an average of the profit. My client’s company, however, had only been earning good money in the past year. While his 2014 figures showed a healthy profit of £130,000, his 2013 profit was just £10,000. We therefore needed to find a lender who wouldn’t take an average, and would be happy to go on the past year’s figures only.
There were a couple of other complications. In order to pass affordability checks, the client needed to find a lender who would take his wife’s income into account as well. She worked as an interior designer, but was also self employed; in this case she was the 100% shareholder of her limited company. She had, however, gone on maternity leave seven months earlier.
Normally, if you are employed and go on maternity leave, a lender will only look at your payslip from the month before you left on the grounds that this is a reasonable indication of what your salary will be when you return. Because she was self employed, we needed the lender to take her pre-maternity leave income as a whole into account.
The challenge for me was therefore to find a lender willing to be flexible and take a view on their situation.
I managed to find a lender who was not only happy to use his company’s 2014 figures, but also her pre-maternity leave income. The 1.89% discounted variable I secured was an excellent deal, and included an offset facility to give them flexibility for reducing their payments.