| Loan amount | £540,000 |
| Purchase price | £600,000 |
| Loan-to-value | 90% |
| Property type | Four-bed family home |
| Location | Berkshire (RG1) |
| Borrower | Multi-source income |
| Term | 30 years |
| Rate | 5-year fixed |
| Lender type | Specialist non-standard income lender |
The Story
Fox Davidson was approached by clients looking to purchase their first main residence.
They had non-standard income in that the first applicant was a director of a limited company and the second applicant was a dentist – effectively a sole trader.
Applicant 1 owned 50% shareholding of his successful business, with good net profits, but he took minimal dividends and a basic director’s salary.
Applicant 2 was a locum dentist, but when the coronavirus pandemic hit, she had lost work at her practice and claimed the SEISS self-employed government COVID-19 grant.
This showed on her bank statements, although, in reality, she had not needed to use the money and had it sat in savings.
She had now agreed to a new fixed-term contract at a new dental practice with a guaranteed draw.
The Challenge
We needed to look at using the first applicant’s share of net profit rather than the salary and income declared on his tax calculations.
Fox Davidson has good working relationships with many lenders who are able to take a director’s theoretical share of net profit as income rather than what is declared on the tax calculation.
Next, we needed to find a lender who could be comfortable with the second applicant having taken the SEISS grant, as well as having just started a new fixed-term contract.
The Solution
Fox Davidson has excellent relationships with non-standard lenders who can take the time to understand a client’s position and become comfortable in lending, even at 90% loan-to-value.
We made sure they were comfortable with using the first applicant’s share of net profit, which showed a healthy, consistent income for the company over the last few years.
We then talked with the underwriter at length regarding the second applicant’s situation.
Although she had claimed the SEISS grant, she hadn’t needed to use it and secured a new contract with a dental practice that was eager to make her an associate once the contract ended.
We supplied the underwriter with a letter from the new practice confirming this, so the underwriter was able to understand that these clients were in a relatively strong position and agreed to the mortgage at 90% loan-to-value.
The pandemic has had an effect on everyone’s lives, and taking the time to understand how any changes might have affected an applicant’s livelihood allow us to present a case in the right way to the right lender.
Mortgages For Self-Employed
Fox Davidson is an award-winning team of property finance consultants. To discuss your property funding requirements, please email enquiry@foxdavidson.co.uk or call us on 03300 100313.
Frequently asked questions
What is a high net worth mortgage?
A high net worth (HNW) mortgage is assessed under the FCA’s high net worth rules rather than the standard affordability test. It is available to borrowers with net assets over £3 million or annual net income over £300,000. Lenders read the net assets test literally and include the equity in your main home, and on a joint application only one of you needs to meet it.
How does HNW mortgage assessment differ from a standard mortgage?
HNW assessment is whole-of-wealth based rather than income-multiple based. Lenders consider total assets, liabilities, liquidity, income, and lifestyle costs, then negotiate loan size based on the overall financial picture.
What loan sizes are available with HNW mortgages?
HNW mortgages typically start at £1 million minimum and have no upper cap. Loans of £5 million to £20 million are routine for qualifying clients. Loans above £20 million typically involve syndicated lending or relationship-driven arrangements with private banks.
How long does an HNW mortgage take to complete?
HNW mortgages typically complete in four to ten weeks. Mainstream HNW lenders are at the faster end. Private bank cases involving committee approval, complex structuring, or offshore elements can take eight to twelve weeks.
Completed transaction. This case study describes a live deal arranged by Fox Davidson. Client details are anonymised and figures rounded.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
Specialist mortgage advice for property professionals, high earners, and HNW clients across the UK.