Mortgage Using Profit Before Tax

The Situation

Our client was in the mid- way through a divorce and wished to purchase her own residential property. She was having trouble securing the loan she required due to her business still recovering from the effects of the COVID-19 pandemic.

She approached us to see if we could source a lender that could offer the loan required based on her current available deposit and financial accounts.

 

The Solution

We were able to secure a deal for the client based on her latest year’s profit before tax. This allowed the client to borrow considerably more than she would have been able to with almost every other lender in the entire UK market.

 

The Process

Securing a mortgage for the client was challenging but ultimately successful due to our status as a whole-of-the-market broker. We had to source a bank or building society that could ideally take the latest year’s profit before tax and apply a generous income multiple.

This was not easy as almost every lender either uses profit after tax + director’s salary or declared dividends + director’s salary. Additionally, few lenders will take the latest year’s figures – most would take an average of the last two years.

We reached out to our contacts at the various lenders and found a specialist bank that was willing to consider the latest year’s profit before tax + director’s remuneration. This was the only bank in the UK who would take these figures at the point of application.

While the deal was priced slightly above the high street rates at the time, the borrowing offered was superior to every other lender in the UK.

The Outcome

We secured a 2-year fixed rate product, knowing that in 2 years’ time we could refinance the deal onto the high street as the client’s business is projected to perform strongly over the next couple of years.

The client has now completed and secured the property. We look forward to working together soon.

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