The Situation
ONOZZI was approached by two new clients who were struggling to secure a mortgage for their first home.
They had been declined by several lenders due to having only one year of trading history.
We immediately began sourcing a suitable solution.
The Solution
We secured a two-year fixed-rate product from a specialist lender. The bank was willing to consider just one year’s trading, supported by a strong set of financial projections prepared by the clients’ accountants.
The Process
Obtaining a mortgage with only one year’s trading history is possible, but the pool of available lenders is limited. Each lender assesses income differently and offers varying loan-to-value ratios.
Our clients required a 90% loan-to-value facility and needed a lender that would assess income based on their business’ net profit, as neither had taken significant dividends in the first year of trading.
This combination proved challenging. The few lenders who could consider the case were offering rates of 7.00% and above, and some could only offer five-year fixed products due to affordability restrictions.
The key to a successful outcome was the broker’s industry relationships. Leveraging a strong existing connection, the broker was able to agree terms with a lender offering a two-year fixed rate at 6.34%.
Importantly, the lender assessed affordability using both the directors’ salaries and their share of net profit before tax, which enhanced affordability.
Additionally, the lender agreed to overlook their usual policy requiring prior industry experience when assessing applicants with just one year’s accounts. This was achieved by providing a strong accountant’s projection for the following tax year, supported by an accountant’s certificate.
The Outcome
The clients were delighted with the result. While the rate is relatively high compared to high street products, a clear plan is in place to remortgage onto a high street lender in approximately 18 months’ time.
We look forward to assisting them again in the future.
