Self-employed client whose income dropped during pandemic moving house

self-employed
The client: Like many buyers, our client wanted to move to a bigger property with more space having lived through various lockdowns. He wanted more outside space, as well as room for a home office as he is self-employed and works some of the time from home. However, while the pandemic fueled his desire to move, it also had an impact on his earnings. He works in IT and saw a drop in his regular income. His earnings have since recovered but he was worried that lenders would not view this dip in income favorably when assessing how much he could borrow and may want to lend less than he needed. The client hoped to secure a five-year fixed-rate mortgage to take advantage of the cheap rates available and to achieve some certainty for the medium term. Numerous lenders were sourced but we needed one who would lend the full £910,000 our client needed for his purchase and who therefore wouldn’t penalize him for his dip in income during the pandemic. Key requirements: –
  • A lender who would lend the full £910,000 required to purchase the new property.
  • A lender who would not penalize our client for his dip in income.
  • A lender offering a self-employed competitive five-year fixed rate and who would agree to add the arrangement fee to the mortgage.
After sourcing the mortgage market, we identified a lender who was offering 1.29 per cent fixed for five years and who would lend the full amount requested. The application process: To support the mortgage application, the client provided details that his income had returned to its ‘old’ level, via management accounts and bank statements. He also provided evidence of his identity. We were delighted to inform him that a lender had issued a formal mortgage offer for the full amount requested at a very competitive rate.
  • Residential property value: £1.3m
  • Loan amount: £910,000
  • LTV: 70%
  • Rate: 1.29% fixed for five years
  • Lender product fee: £999 added to the loan
  • Monthly payment: £5,298
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