Mr and Mrs S, a professional couple living in London, were looking to re-mortgage their home after their existing fixed rate deal had come to an end. They had an outstanding mortgage amount of £450,000 on a property that was valued at £600,000 and simply wanted to ensure that they were getting the best rate available to them and to fix that rate for 2 years to give them security of payment.
Both Mr & Mrs S were self-employed, with Mrs S working as a contractor, and after failing to find a lender who could help them they approached Choice Mortgage Solutions. Thanks to our extensive experience working with the self-employed and contractors, we understood that the typical high street bank wasn’t necessarily going to offer the best loan amount and knew it would take some specialist knowledge to help this client. Mrs S had been contracting for over 9 years and had a daily rate of £550 but took a salary and dividends income of £43,000. Because of this, typical lenders would only allow her to borrow against this income figure. The majority of lenders when assessing income work off the average of the last 2 years salary and dividend income, which meant lenders took this income figure of £43,000 and then multiplied by approximately 4.5, to give a total borrowing figure of £193,500.
Using our experience and with knowledge of lenders that have specific lending criteria for contractors, we were able to find a lender that would lend on Mrs S’s daily income rate of £550 per day. Her annual income was assessed using her day pay rate of £550, multiplied by 5 days per week and then by 46 weeks of the year totalling £126,500, which using the above multiple of 4.5X income, meant we could secure a loan of £569,250 – a whole £375,750 above what many high street lenders would lend.
Choice’s experience with contractor mortgages, and ability to assess the whole of the intermediary market ensure that Mr and Mrs S received a high enough mortgage offer, at a competitive fixed rate without having to pay a premium for being self-employed.