Our client had been working at one of the big four accounting firms for several years, earning a salary of around £90,000 per year, when he was offered a new position at a competing firm paying £160,000 annually. Rather than accept this offer, however, he elected to cast out from the security of salaried employment, and to set up a consultancy of his own alongside one of his colleagues. This decision looked to be a sensible one, and after just two months of business our client was able to show earnings of £45,000 and proposals of over £171,000 with clients.
The issue our client faced was that despite his respectable earnings history, as well as the early signs of promise shown by his fledgling business, he was unable to find a lender that was willing to factor in the entirety – or even the majority – of his projected income. This was necessary, because the property he had set his sights on was worth £660,000, meaning that, combined with his deposit of £140,000, he needed a mortgage of £520,000 in order to complete the purchase.
In addition to these details, our client also had £50,000 set aside with which he planned to meet his mortgage payments on the off chance that the business earned less than expected during its first couple of years.
Many lenders are often unwilling to accommodate self-employed borrowers unless such borrowers are able to provide two years’ worth of accounts. On this occasion, not only did our client not have two years’ worth of accounts – he did not even have one full years’ worth of accounts. It was therefore necessary that we pinpointed the lenders in the market who typically show the greatest degree of flexibility regarding such matters and attempt to explain why our client’s unique circumstances deserved special consideration. This task would have been extremely difficult – perhaps impossible – if it weren’t for the fact that Private Finance has access to the whole of the market, and strong working relationships with a wide range of lenders.
Having located lenders that we believed might be open to the idea of lending to our client – most of whom were small building societies – we then presented them each with a folder of documents with which we hoped to demonstrate the sturdy earning potential of our client. Specifically, we provided them with evidence of the lucrative job offer that our client had rejected prior to starting up his new consultancy firm, our client’s company’s net profits to date, and our client’s business plan and accountant’s projection.
Once we’d surveyed the market extensively and presented the details of our clients situation to a number of lenders, we were eventually able to find a building society that was willing to lend our client the full amount he required of £520,000 on a two-year variable rate of 1.89% and a loan-to-value of 80%. With this loan, our client was able to purchase the property he desired.