Along with her sister, the client was a director of a Limited Company by Guarantee (LBG) for an arts sector charity.
An LBG has Guarantors who guarantee to pay back a limited sum if the company is unable to fulfil it's debt obligations. But because there are no shareholders, no dividends are paid. Instead, any profits generated are re-invested back into the company.
The client also explained that the charity only had funding secured until 2027. Though they expected it to be renewed at that point.
An LBG is a company structure commonly used by Charities, community projects and other non-profits. Yet the client had struggled to find a broker familiar with it, or inclined to take the case on.
The solution was actually straightforward.
Several lenders explained they would simply treat the client as employed for income assessment and affordability, based on their PAYE salary. Even though some mainstream lenders could lend, overall the best two year fixed rate deal turned out to be with a small Building Society.
The client was delighted and moved into their first home in late 2024.
On the protection side, I discovered during the fact-find that neither sister received any sickness benefit from their company. This left them vulnerable to financial hardship if they became seriously ill. The client could potentially lose their home.
As both were company directors, we were able to help them secure Executive Income Protection, paying 80% of their respective salaries to their company if either of them were off work due to ill health or injury for more than two months. In turn, the company would pay the benefit to the client via PAYE, minus income tax and national insurance.
They were delighted, as this was not something they'd even been aware they could do, and having their company pay the Executive IP premiums was an added bonus.
Case Study 3
Case Study 9
