Mr and Mrs Jackson: Self-employed case study

Providing a flexible approach to underwriting

Who did we help?

Mr and Mrs Jackson live in a small rural village and their house adjoins the village post office which had recently closed its doors for the last time.

This presented an exciting opportunity for the Jacksons who wanted to buy it and knock-through to create one large family home. The couple ran an unusual company which saw a strong net profit in the past year.

What did they need?

Their current home is worth £365k and their mortgage is only small.

The purchase price of the post office was £335k and the combined end value of the enlarged house was £800k - offering them a small uplift in overall value. The couple had some savings, but they wanted to buy the property through borrowing and keep their savings for conversion works. They therefore needed to borrow all of the purchase price of the new part of the home.

Why were they facing challenges?

Their existing lender had an inflexible outlook and wasn’t willing to assist due to the unusual scenario and because the couple were self-employed, and only take minimal dividends from the company.

While their company was growing and could demonstrate year-on-year improvement, in previous years the net profit performance wasn’t quite as strong as the most recent year.

How did we help?

By applying some creative and sensible thinking, based on their actual circumstances, we were able to offer a solution that provided enough funds to purchase the new property by using the equity from their existing house.

This was achieved by engaging a valuer at an early stage and providing them with full conversion plans and costs. The overall LTV was 55% on day one so we allowed the works to take place with a condition that the titles were merged within three months. We took a first charge over both properties until the titles were merged and as planning permission could not be obtained until they owned the property, we retained a portion of the funds until this could be sorted out.

Our individual approach to underwriting meant we took a pragmatic view of income assessment and spoke to their accountant who confirmed business was strong and would further improve. The family was able to benefit from a market-leading 2-year fixed rate product.

 

Could our flexible approach to lending help one of your self-employed clients? Give our Furness for Intermediaries team a call on 0800 988 1561 or contact your Business Development Manager.