Residential remortgages for complex income streams
Who did we help?
Ms Nicholson is a self-employed King’s Counsel (KC) barrister, operating as a Limited Company for more than 25 years. She takes minimal dividends and salary from the company because she also earns an annual salary of £60k through her employment as a judge.
Ms Nicholson also has three buy-to-let properties which are self-financing, with the rental income covering the required mortgage payments at 125%.
Ms Nicholson is a self-employed barrister, operating as a Limited Company and also earns an annual salary through her employment as a judge.
What did she need?
Ms Nicholson was seeking a remortgage of her residential property, for which she required a loan of £520k. The London-based property is valued at £1m. For the affordability to work on the loan, it needed to take into account her annual salary plus share of pre-tax profit from the limited company.
Ms Nicholson’s broker required a lender able to take a view of the loss in profit in the context of the 2023 and 2024 accounts and use share of pre-tax profit in addition to income.
Why was she facing challenges?
Ms Nicholson’s Limited Company made a loss in 2022 as a result of the after-effects of the global pandemic; barristers are required to bill their work in advance but often on 12 months’ payment terms.
Her case had therefore been rejected by the automated affordability assessments undertaken of most larger lenders. Ms Nicholson’s broker required a lender able to take a view of the loss in profit in the context of the 2023 and 2024 accounts and use share of pre-tax profit in addition to income.
How did we help?
We studied Ms Nicholson’s Limited Company management accounts for 2023 and those for the first nine months of 2024. This showed the company was back in profit in 2023 - and 2024 was set to be in line or above the previous year’s figure with significant levels of billable work in progress.
Our Business Development team referred the case to one of our senior underwriters who manually assessed the details and was able to agree the loan due to the plausible explanation in loss for the Limited Company during 2022. This, in addition to the profit earned in 2023 and projected for 2024, meant we were satisfied with the affordability for the loan.
Could our flexible approach to lending help one of your Limited Company or self-employed clients? Give our Intermediaries team a call on 0800 988 1561 or contact one of our Business Development Managers.