How can projected future income help secure a large mortgage?

Tuesday September 3, 2019

A number of the clients we work with are company directors or shareholders and therefore their income is paid in dividends. The very nature of business means that this can result in fluctuating income, as dividends will be based on profits which are affected by a number of variables including market forces and the company’s investment strategy.

Case profile

Our recent case is a classic example of this. Our client was a one-fifth shareholder in a company which provided him with a small basic salary and six figure yearly dividend. Over the course of the past three years, the company had expanded significantly. Therefore, profits were retained by the business and – as a result – the dividends drawn over the past three years had reduced by between 50-65%.


Our client’s borrowing requirements, existing commitments and dependents made their case a challenge for conventional lenders however we were able to find a solution by looking to the private bank sector.

Our client was offered the full loan amount on a fixed rate, interest only basis. Our team was able to negotiate this based on the fact that their projected future income would allow the client to overpay in coming years, thereby reducing the loan every year over the first five years.

This flexible solution was agreeable on both sides and our client’s case proceeded successfully to completion on their large loan.

Deal highlights

Loan amount:
2.79% 5 Year fixed rate
Loan To Value:64%
APRC:Overall cost for comparison 2.80% APRC representative variable
Term:20 Years
Type:Interest only
Loan purpose:Purchase
Lenders arrangement fee:1.00% of loan amount
Early repayment charge:
5% of the outstanding loan in Year 1, reducing by 1% year on year for 5 years.

This case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.

Please note that this specific deal may not be available to – or suitable for – all customers, dependent on their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This document may not contain all the information needed for customers to make a decision and they should seek advice.

Overall cost for comparison 2.80% APRC representative variable based on 60 monthly payments at a fixed rate of 2.79% followed by 180 monthly payments at the lenders variable rate, currently 2.59%. Total amount to be repaid £2,516,866.38. As the mortgage rate is not fixed for the duration of the loan this amount is illustrative and may be vary in particular as a result of variations in interest rate.

Because part of the loan is a variable interest rate loan, the actual APRC could be different from this APRC if the interest rate for your loan changes. For example, if the interest rate rose to 7.84%, the APRC could increase to 8.30%. The actual rate and product available will depend upon individual circumstances and may not be available to everyone. Ask for a personalised illustration. 

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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