- Client: UK nationals and property developers
- Property Value: Circa £2 million
- Location: Near London
- Purpose: Equity release for home improvements and debt consolidation
Enness was approached by UK-based property developers looking to remortgage their primary residence, valued at approximately £2 million. The clients wanted to release equity from the property to fund improvements to their home while also consolidating existing unsecured debts.
The main challenge was understanding the clients’ income. Their property development businesses generated fluctuating profits, with significant differences between individual financial years. The latest year had been particularly strong, but this presented an affordability challenge because not every lender would be comfortable relying on the most recent level of income when assessing the application.
The clients therefore needed a lender that could look beyond a simple average of their historic earnings and understand the growth in their businesses. Enness reviewed the clients’ circumstances and approached lenders with experience in dealing with property developers and more complex income structures.
After assessing the available options, Enness identified a lender willing to take the clients’ most recent profits into consideration when assessing affordability. The stronger performance was presented alongside the wider financial picture, allowing the lender to understand the underlying position of the businesses and the clients’ ability to support the proposed borrowing.
This resulted in a remortgage solution that allowed the clients to release the equity they required from their home. The additional funds could then be used towards their planned home improvements and to consolidate their existing unsecured borrowing.
The case demonstrates why income can be an important consideration for property developers looking to arrange residential finance. Where earnings fluctuate from year to year, the right lender may be able to take a more detailed view of the underlying business and the reasons behind changes in profitability.
For clients with complex or variable income, remortgage solutions can potentially provide an opportunity to restructure existing borrowing and release equity, subject to affordability, valuation and lender criteria. High-value mortgage solutions may also be relevant where the property and borrowing requirements fall outside standard lending parameters.
If you are a property developer with fluctuating income and are considering releasing equity from your home, speak to a mortgage specialist to discuss your requirements.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, affordability, valuation, underwriting and lender criteria. Property values can fall as well as rise, and terms and availability will vary depending on individual circumstances.
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.
