The client, a couple in their early 30s, were looking to purchase a larger home in South West England that they could raise a family in. Applicant one was a company director of a tech company, which had recently taken outside investment.
The problem was that the investment was conditional on a 'dash for growth' plan, involving rapidly increasing headcount and marketing costs to grow market share and turnover.
The plan intentionally sacrificed profitability for a couple of years, in return for larger, sustainable profits and a dominant market position from 2025 onwards. This meant the business ran at a small loss for the most recent trading year, and ongoing losses were incurred in the current year.
Due to the planned losses, the investors also agreed to temporarily increase applicant one's salary to compensate for temporarily being unable to drawdown dividend payments.
It was clear the loss made the mortgage a non-starter with virtually every lender in the market. Understandably, given a business needs to be profitable to sustain salaries and dividend payments for directors.
However, after extensive research, we managed to source a potential lender, a small building society specialising in complex income cases and who manually underwrite each application on it's own merits. After sending the case details and supporting documentation, including an accountants reference and business projections, they gave the go-ahead to submit a full application.
The application was submitted in March 2024, the mortgage was approved the following month and they completed a couple of months later. The clients were delighted, as they had feared their circumstances would make it impossible to move.
Case Study 3
Case Study 9
