Our clients recently relocated to the Isle of Mull in Scotland, where they opened their own restaurant. While currently renting, they had plans to purchase a new home in the future once their business had established a financial track record.
However, properties for sale on the Isle of Mull are rare so when the clients were offered a family-sized home below market value, they approached us to explore the possibility of securing a mortgage with just one year’s business accounts.
We secured a discounted mortgage at 1.76% below the lender’s variable rate, accompanied by a £500 product fee. This mortgage provided a discount for two years and had low early repayment charges, allowing the clients to gradually reduce the loan through regular overpayments.
There were two primary challenges to overcome. Firstly, the clients only had one year’s business accounts, which, under normal circumstances, would not meet the borrowing requirements based on their available deposit and the loan-to-income levels typically offered by mainstream banks. Secondly, the property’s relatively remote location and its current use as a commercial bed and breakfast could pose issues with certain lenders.
To secure the desired loan, we approached a building society that would lend in Scotland. This lender was willing to consider the figures from the first set of business accounts, along with a projection from the accountant. Furthermore, they offered a loan-to-income ratio of almost 5.5 times, which is uncommon in this type of scenario, as most lenders usually cap it at 4.5 times.
Finally, the lender agreed to provide financing for the bed and breakfast property, on the condition that the security was registered as residential by the clients’ solicitors. Any minor concerns related to a septic tank were resolved during the legal process. As a result, the clients were able to complete the mortgage process swiftly and efficiently.
Our clients are thrilled with the outcome of this process. The opportunity to purchase a property on the Isle of Mull is infrequent, making it an opportunity they couldn’t afford to miss. We look forward to continuing our partnership with them in the future, especially when their mortgage deal is up for renewal.
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