We have a customer who asked us obtain a mortgage for him. We have known the customer a few years and so were comfortable we could help him as he had been self employed for a few years, so we thought it would be a nice straight forward application.
We asked him to complete our paperwork. Once we had everything down on paper we were able to go and do this research.
When we were going through his income and expenditure he was struggling to pass affordability due to his previous years accounts being a fair bit lower. The reason for this was purely down to covid and him being unable to work for a period of time.
What we did
Ordinarily we would just use a lender who averages out the last 2 years figures. This however was not passing affordability. That means we had to look at lenders who use the latest years figures only.
This includes lenders who:
- Ask for 2 years figures, but work off the latest and
- Lenders who only ask for the latest years figures.
Some lenders do have issues where covid has had an impact on the business but we were able to evidence (through a later set of accounts and business bank statements) that his income was no longer affect by covid and his income had not only returned but also had a slight increase on prior years.
We were able to find a few options for him. Typically these were small to medium sized building societies. He went with our advice and we applied to a lender who was marginally more expensive but we had a lot more experience with as he wanted the reassurance there would be no problems when it came to the purchase due to missing out on a few previous properties.
We submitted the application and within the week had an offer subject to valuation. This was a rate of under 2.9% but more importantly fixed for 5 years which protects him against future rate rises and should also ensure he is safe should covid cause future problems with the economy and his income.
I dont think we did anything amazing here. I think this falls under a bread and butter application for an experienced broker. Some brokers would go straight to a “specialist lender” however and their rates typically start at 4.x% so you can see here we have helped the customer obtain what he wants and at a competitive rate.
One years accounts or latest years figures mortgage applications falls firmly into Mortgage broker territory I think. Its one of those things that is difficult to place on the high street, especially since covid. But is easy enough to overcome and at near normal rates.
If you find yourself in a similar position, please get in touch. We would be happy to take a look and see if we can help.