£1.125 Million Loan For A Self-Employed Individual

• Client: UK nationals and residents, with complex income due to employment status
• Property Value: £1,500,000
• Loan Amount: £1,125,000
• LTV: 70%
• Product: 3-year discounted variable rate, pay rate 3.94%

Enness was approached by a couple looking to finance the purchase of a new family home valued at £1.5 million. The clients were seeking a high loan-to-value mortgage to maximise the amount they could borrow while structuring the finance around their individual income profiles.

One of the applicants was employed, while the other was self-employed through a limited company and primarily remunerated through dividends. Although this is a common structure for business owners, it can create challenges when applying for a mortgage. Self-employed borrowers may choose to retain profits within their company rather than draw them personally, meaning their taxable income may not always reflect the underlying performance of the business.

In this case, the self-employed applicant’s income had not yet been reflected in a filed tax return. This presented an additional challenge, as many mainstream lenders rely heavily on tax returns and established income records when assessing affordability. The clients therefore needed a lender that could take a broader view of their financial position and consider alternative evidence of income.

High street lenders were unable to accommodate the application based on their standard affordability criteria. The absence of a filed tax return for the self-employed applicant meant that the income required to support the mortgage could not be evidenced through the usual channels. For a high-value property purchase, this significantly restricted the number of suitable lenders available.

Enness approached specialist lenders with a greater appetite for complex self-employed income and negotiated a bespoke solution with a boutique lender. The lender was prepared to take a more holistic approach to affordability, considering the applicant’s existing contracts and evidence from bank statements rather than relying solely on a filed tax return.

The resulting facility provided the clients with a £1.125 million mortgage, representing 70% LTV, on a three-year discounted variable rate with a pay rate of 3.94%. This allowed the clients to proceed with the purchase of their family home despite the complexities surrounding the self-employed applicant’s income.

This case demonstrates how the structure of a borrower’s income can significantly affect the lenders available, particularly when purchasing a high-value property. Where conventional affordability assessments do not fully reflect a borrower’s circumstances, a specialist lender may be able to consider additional evidence and take a more comprehensive view of the overall application, subject to lender criteria.

Risk Warning:
Mortgages carry risks. Interest rates can change, particularly where a variable or discounted variable rate is used, which may increase monthly repayments. Failure to maintain mortgage repayments could result in enforcement action and the loss of the property used as security.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, affordability assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.