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Large mortgage for pharmacists buying dream home

The clients: A married couple, both of whom are pharmacists who run their own business. They asked for our help to find a mortgage to purchase their dream family home in an affluent area of Liverpool with good schools and, importantly, closer to family.

The purchase would mean a big step up in monthly mortgage payments, but the couple felt they could afford it because they had recently refinanced two business loans onto one more competitive rate and this had considerably reduced their outgoings.

The property:
A large detached house with seven bedrooms and four reception rooms in need of some work to create a second kitchen and downstairs bathroom so that for his/her elderly parents could live with them. The couple believed that the work would significantly increase the value of the property and be a good investment and future inheritance for their children.

The finance:
The couple had been advised by their accountant that they could take out a director’s loan of £480,000 from their business to use as a part of the deposit. The remainder would come from the equity in their current home.

Whilst this all sounds very straightforward, there was a spanner in the works which meant that they would not be able to get a mortgage with one of the high street banks. The new business loan has a goodwill element which makes the company profits appear much lower than they really are.

The application process:
We approached an intermediary only lender which caters to business operators and the self-employed. Not only does this lender have a good understanding of business accounts, it is familiar with the concept of business goodwill and did not see this as a barrier to borrowing.

Keen to understand why the couple wanted a mortgage so much larger than before, we explained to the lender the couple’s plans and their change in financial circumstances.

The lender was happy with the explanation and the underwriting confirmed that the couple would be able to service the mortgage. To our clients’ delight, a formal mortgage offer was subsequently issued. Here are the details:

Property Details

Property value: £1,053,000

Loan amount:
£789,750

LTV:
75%

Rate:
2.89% 2 year fixed

Term:
23 years capital and repayment

Lender arrangement fee:
£999 added to loan amount

Mortgage payment:
£3,951 pcm

Consultant: Erin Gallacher, 01625 416392

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

Mortgages for Business Ltd is registered
in England and Wales No. 2502713.

Registered office:
17 Kings Hill Avenue,
Kings Hill, West Malling,
ME19 4UA.

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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