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Applicant who’s salary alone doesn’t meet affordability
PR Team | 10.06.2024
You’re contacted by a client who’s the owner of a small social media marketing consultancy. The client is looking to purchase their next home for £450k, with stamp duty at £10k. Out of the equity from the sale of their existing house, they want to keep £20k back for home improvements which means they need a residential mortgage at 80% LTV.
They only have the last 12 months’ accounts and the salary they draw from the business doesn’t provide the affordability needed for the purchase.
This is making it challenging to find a lender who’ll support their application.
You call your office BDM to discuss the case as you know we can look at each case on its own individual merits. They explain that we may be able to consider a projection for the second year income from a qualified accountant, as long as a suitable business plan is provided. The level of projected income used can be up to 30% greater than year one’s confirmed income. Alongside this, on exception, we might also consider using a salary plus net profit.
The BDM works closely with an underwriter to see if we can accept the case and after reviewing the application details, we’re able to offer the client the mortgage they need to enable them to purchase the property.
Sometimes, a conversation can be the difference between a ‘no’ and a ‘yes’…
