Area: Reading
Amount raised: £987k
Listen to this case study here
Did you know that self-employed borrowers are more likely to be turned down for a mortgage than employed borrowers? This is because lenders often view self-employed income as being more volatile and less reliable than employed income. However, there are a number of lenders who specialise in mortgages for self-employed borrowers, and with the right advice, it is possible to secure a mortgage even if you are self-employed.
We were approached by a client who wanted to purchase a new residential property with their partner. They had been running a successful marketing company in the UK for a number of years and had expanded to operations in America. They had created an LLC as a subsidiary of their UK company and have been living in the US for the past two years, while they established their foreign operations.
The scenario
We were contacted by a client who had been residing in the US while they expanded their company operations. They had achieved their initial objectives and were looking to move back to the UK in order to purchase a family home. They already had a mortgage on a property in America and wanted to complete their move back to the UK before their first child was born.
The client’s accounting period changed in the last financial year, which meant that we only had incomplete financial years to use when applying for a mortgage. Both operations were profitable, but the client would need to include income from abroad in their application in order to meet affordability requirements. This is because the client was looking to retain their property in the US alongside their new home in the UK.
The solution
We agreed on a level of income that we could use for the application. We used undrawn profits from the UK and the US to meet affordability requirements and obtain the mortgage the client required.
While we are not qualified accountants, we have extensive training with relation to financial statements. This allows us to understand complex self-employed situations and present a simplified solution to a lender’s underwriting team. For example, we can explain how a client’s foreign income can be used to meet affordability requirements, even if the client’s income fluctuates from year to year.
A small haircut of 10% was applied to the income derived from overseas in order to account for foreign currency fluctuations. However, this did not materially impact the overall affordability.
If you are in a similar situation or operating a company overseas, Orton Financial can advise you on the finance options available in the market. Contact us today for a free consultation.