Our client recently set up his own limited building company so only had one year’s worth of accounts. He was buying a new family home and wanted to port his existing mortgage across in order to avoid paying the early redemption charge. However, his lender rejected the application because his new business did not have enough of a track record of income to satisfy its affordability criteria.
He came to us to see whether we could find a solution. We needed a lender who would agree to lend based on one year’s accounts, where most require accounts covering at least two years. As part of our initial conversation, we also established that the client had no protection in place for him or his family should anything happen to him, so he would also need life insurance, critical illness cover and income protection.
Key requirements: –
• A lender prepared to lend based on the client’s one year of accounts.
• A lender willing to add the arrangement fee to the loan.
• Competitively-priced life insurance, critical illness cover and income protection, providing sufficient cover for the client and his family.
After sourcing the mortgage and insurance markets, we identified a lender who agreed to lend the full amount required at a competitive rate based on one year’s accounts. We recommended that the client pay the early redemption charge and switch to this new lender. We also identified an insurer who would offer the required cover at a competitive price, including free critical illness cover for his children.
The application process: To support the mortgage application, the client provided his business accounts, as well as evidence of his identity. We were delighted to inform him that a lender had issued a formal offer for the full amount requested.
• Property value: £600,000
• Loan amount: £375,000
• LTV: 62%
• Term: 35 years
• Rate: 4.21% fixed for five years
• Lender product fee: £999 added to the loan
• Monthly payment: £1,713
