How did we secure a mortgage for our entrepreneur client, despite lack of trading income?

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When clients are starting out in a new venture, there are inevitably periods when income is compromised by the need for investment. At these times, it’s very difficult for a mainstream lender to approve a mortgage or remortgage, as they need to adhere to strict affordability criteria. However, the private banking sector can take a much more holistic view of finances, offering more opportunities to tailor financing to the client’s individual circumstances.

Case profile

Our client approached us looking to remortgage their main home for £2m, whilst also raising some additional capital for home improvements. An additional layer of complexity was added by the fact that the property comprised several titles and substantial acreage, which can be an issue for many lenders.

The client was a former investment banker in the process of building their own business. As it was such early days for the venture, there were no profits to report. The client did generate income from some personal trading activity. However, due to the way it was classed, it was not subject to tax by HMRC and therefore did not appear on the client’s tax return making it very complicated for a lender to accept.

Solution

By putting the case in front of a private bank, we were able to have pragmatic and realistic conversations about the client’s financial situation. The private bank was happy to accept the trading income and showed great flexibility in how this was verified.

This income was, however, not enough on its own to cover the cost of the mortgage along with the client’s outgoings, which included substantial school fees. However, as the client is a HNW individual, our team was able to present their situation holistically, including their cash reserves and other assets. This private bank allowed these to be taken into account to make up the shortfall and agree to the mortgage. A three-year mortgage was secured on a three-year fixed rate basis on very competitive terms, resulting in an incredibly happy client!

If you are looking for finance during a time of compromised or interrupted income, there are options to be found by working with the right team. Find out more about how we can help by contacting one of our expert advisers, who will be happy to discuss your personal circumstances on a confidential basis.

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Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

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