We were recently approached by a UK-based couple with a complex income structure who were looking to purchase a second home in London. Their main residence was located outside London, and they wanted a base in the capital, with a Victorian terrace property in Chelsea valued at approximately £4.25M identified as the preferred purchase.
The couple wanted to maximise the amount they could borrow, requiring a mortgage of £3.825M, equivalent to a 90% loan to value (LTV). Securing a high LTV mortgage against a property at this level presented an additional challenge, particularly when combined with the clients’ more complex income profile.
A significant proportion of one applicant’s income was paid through company shares. As these shares were still vesting, the client did not yet have access to the full value of them. This meant that the income could not simply be assessed in the same way as conventional salaried earnings.
Enness reviewed the clients’ wider financial position and approached lenders with experience of assessing complex remuneration structures. One lender was prepared to consider the company shares as part of the income assessment, supported by the applicant’s established three-year track record.
Importantly, the lender was also able to base the required borrowing on the income of just one applicant. This provided the flexibility needed to support the £3.825M mortgage requirement without relying on both applicants’ income.
The resulting mortgage was structured at 90% LTV against the £4.25M Chelsea property, with a five-year fixed rate and a 15-year mortgage term. The solution allowed the couple to secure the level of borrowing they required despite the combination of a high LTV and complex income structure.
This case demonstrates why lender selection can be particularly important for high-value borrowers whose remuneration includes company shares or other forms of variable income. Different lenders apply different approaches to assessing such income, and the supporting evidence and track record can play an important role in the underwriting process.
Enness specialises in complex mortgages and high LTV lending, working with lenders that can consider circumstances outside standard high street criteria. Each application is assessed individually, with the availability of finance and final terms dependent on the borrower’s circumstances, affordability, property and lender criteria.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, valuation, due diligence and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances. The terms referenced relate to a historical case and are not indicative of current or future pricing.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage. Where affordability relies on variable remuneration or company shares, changes in income or the value or availability of those assets could affect the borrower’s financial position. Property values can fall as well as rise, and borrowers should ensure they understand their repayment obligations.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
