Large mortgages and complicated income streams

Getting a large mortgage when you have multiple and complex sources of income is not always straight forward but it is possible - if you know which lender to approach – as residential mortgage adviser, Charlie explains.

Recently, we have seen an increase in the number of customers wanting to borrow in excess of £500,000 to buy a new home or refinance the one they already live in. Often common to all these people is how they earn their living; it’s never straight forward! And going directly to a lender can sometimes end in disappointment.

That’s not to say, that lenders don’t have the appetite for these cases, it’s just that you need to know which ones to approach. This year we’ve successfully helped several customers with complex income arrangements get some very large mortgages… 

Using profit and salary for limited company directors

A growing number of lenders will now consider applications from limited company directors who want to use their salary and the profits from the business as proof of income, instead of the more traditional paper trail of salary and dividends drawn. These lenders allow net profit before dividends but after corporation tax, share of net profit, pre-tax profit and some will look at retained profits within the company. 

As an example, we were recently approached by a customer who needed a mortgage of circa £900k and wanted the lender to assess affordability based on more than eight times salary and dividends. No lender offers mortgages on this basis! However, we were able to get the customer the mortgage he wanted using his salary plus the net profits from his business.

Self-employed borrowers with fewer than 2 years’ accounts

Generally speaking, lenders want to see a track record of at least two years from a director of a limited company. However, we got lots of customers looking for mortgages with trading figures of just one year. There are only a few lenders that will consider these applications subject to meeting other important criteria; the customer must have previous experience in the given field of work, i.e. if they were a sole-trader before setting up the company.

For example, we were approached by a doctor who had one year’s account working in the private sector and was looking to borrow £1m to buy a new home. Because the customers has been a doctor for years, we found a lender willing to consider the application. It took a bit of negotiation on our part and the customer had to provide a bit more paperwork but we successfully got the doctor the mortgage he needed.

Unearned income

Lenders like to see an “earned” income from employment or self-employment but we often get enquiries from customer who do not “earn” an income as such. By this I include landlords whose only source of income is the profit from their property portfolios and people with income from other types of investments. Not every lender will consider these sorts of applicants.

Recently, we had a customer whose income comes from song royalties. He was looking to borrow around £650,00 to remortgage his home. It took quite a lot of research before we found a lender that would accept this scenario – but we did!

Above is only a snapshot of the complex enquiries we receive for residential mortgage needs, so please do contact us if you are in a similar position. Although we have seen an increase in enquires for mortgages of £500,000+, we can help with smaller amounts too. And of course, your income might be far less complicated – which would make our job much easier!

You can call me directly on 01732 471604 or request a call back from one of our team here.

 

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. 

 

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