MORTGAGE FOR COMPANY DIRECTOR LENDING INTO RETIREMENT WITH NO PENSION PROVISIONS

The Situation

Our client was looking to refinance his main residence which had been under significant renovation for the last two years. His objective was to raise capital over and above his current mortgage balance so that he could replenish his savings that had been spent on the bulk of the renovation itself.

However, mortgage rates at time of enquiry were high so he was looking for the most cost-effective option.

He approached us to see if we could source a tailored solution that would tick all the boxes.

 

The Solution

We secured a market-leading tracker product with a well-known building society. The society was able to offer a 40-year term even though the client didn’t have any current pension provisions.

This reduced the client’s payment to a manageable level and allowed him to raise the capital required to replenish his savings.

 

The Process

There were several issues to resolve on this case so sourcing a suitable lender was key. The applicant was director of his own company but drew very little in dividends to remain tax efficient so on paper, his salary and dividends wouldn’t have been sufficient to secure the desired loan amount.

Additionally, he was in the process of selling one of his investment properties but the conveyancing process was protracted and the property wasn’t tenanted meaning most lenders would take the mortgage as a commitment. The applicant also had two car loans set to expire within 6 months.

We narrowed down our search to lenders who could consider the applicant’s share of net profit within the business in addition to his director’s salary. However, from our pool of lenders, hardly any would discount his property under offer or his car loans.

However, one building society was able to take a view on the commitments in the background and discount these completely from affordability. The underwriter was also able to disregard the investment property under offer even though the process hadn’t completed at time of application.

Furthermore, the lender was able consider the applicant’s share of net profit & director’s salary for affordability and applied a generous income multiple.

Finally, we were even able to secure a maximum term of 40-years even though the applicant wasn’t yet paying into a pension. The building society took a long-term view on the applicant’s limited company and could see that he was paying salaries to employees in addition to the growth of the business overall.

The Outcome

We secured terms that met all the client’s objectives. We were able to secure a competitive rate with the desired borrowing but also structure the facility in a way that was affordable to the client during a challenging economic outlook.

The client opted for a tracker with no tie-ins meaning he is free to refinance at any time without incurring exit penalties.

We look forward to working with the client and refinancing his mortgage onto even better terms once fixed rates have decreased.

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