Raising capital on a self-employed client’s primary residence for renovation project
13th September 2018
THE SCENARIO
Some of our most familiar types of client are those who are self-employed. This is because self-employed people face a lot more difficulties when organising a mortgage, especially when the numbers are high. Enness, however, has a proven track record of helping these clients.
One such client came to me looking to raise funds from her unencumbered residential property to allow her to begin a barn conversion she recently purchased which would then generate income as a holiday let. She was a self-employed interior designer which meant that her income was very healthy but irregular and she only had one year of proven higher self-employed income which for most lenders is not enough.
Because she was raising funds on her residential property this made it a regulated mortgage. While it is regulated, lenders require that affordability is proven from her earned income which was not enough for how much she wished to borrow if only based on the latest year’s figures.
She was looking to raise funds of around £450,000 from her primary residence valued at £2million. Fortunately, she had a portfolio of shares worth £800,000 which significantly boosted her overall net worth. It is very unusual for lenders to consider a portfolio as a form of income, but not unheard of.
OUR SOLUTION
It was clear to me that we would need to approach a lender that would look at my client’s overall net worth rather than just her income. Only a very small handful of lenders will do this, but I have a great relationship with a smaller building society that has very flexible underwriting and is happy to consider a client’s portfolio as a form of income. I was able to negotiate a discounted variable rate of 2.35% with just a 1% arrangement fee. The repayment term was agreed to cover 24 years which was ideal for my client as her combined salary and income from the holiday let would allow for this flexibility.
Each and every client that comes to Enness is different, and I am very proud of the tailored service that we are able to provide, no matter a client’s circumstances.
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