How we helped a company director with four-figure overdraft balances remortgage

The remortgage

• Remortgage required: £200000, including just under £60,000 capital raise to consolidate debts.
• Property value: £600000
• Equity: £400000
• LTV: 33.33%

The Problem

A recent company director client approached us to remortgage his home. It was a joint application with his wife. The problem was he had heavy overdraft usage on both his personal and business bank accounts. Thousands of pounds overdrawn on each.

Not only that...

1. He needed to raise funds to consolidate debts and complete a home refurbishment.
2. For affordability, he needed to use his share of company net profits and salary, not salary and dividends

The biggest problem was he'd inadvertently gone about things the wrong way...

• using his business overdraft to refurbish his business premises and
• his personal overdraft to fund fixtures and fittings for his home refurb.

Before applying for the remortgage.

With the benefit of hindsight, it would have been much better to remortgage first then either:

• raise additional funds for the business and home refurbs and/or
• use his overdrafts if necessary

The Solution

Nearly all the net profit lenders I spoke to wouldn't consider it.

But we kept at it and after explaining the circumstances, eventually found a small building society happy to lend using his pre-tax net profits and salary for income assessment.

The client got his two-year fixed-rate remortgage deal, cleared his unsecured debts, and had enough funds left to complete his home refurbishment.