You are here: Home - Better Business - Business Skills -

The foreign national, the rent shortfall and the trading loss – Case Study

by: Noel Edmonds, mortgage manager, Largemortgageloans.com
  • 18/05/2017
  • 0
An application for a foreign national, self employed with a loss on the latest year's accounts and rental income shortages, sounds like a tall order to place. Noel Edmonds of Largemortageloans.com explains how it was done.

The challenge

Noel EdmondsThe clients were looking to purchase a new-build buy-to-let property to rent out in the UK. The challenges we overcome were: one of the applicants was a foreign national, they were self-employed with the most recent trading year showing a net loss. In addition, the rental income was insufficient to meet the affordability criteria; this made arranging a mortgage challenging.

The husband is self-employed and the sole income provider. The latest full year accounts of the business show a £100,000 trading loss. This created a challenge as many lenders would not be happy to take a view on this.

The rental income alone would not meet the affordability criteria for the mortgage. This created a further layer of complexity as other sources of income would have to be taken into account and many lenders would not be happy to lend on this basis.

The deal

 

LOANSTABLE-180517

 

The solution

We have strong relationships and experience in placing mortgages with a large range of private banks. This includes private banks that lend to foreign nationals and do not assess affordability based purely upon the rental income of the property.

We presented the client’s case to the lender, and were able to negotiate their terms to raise the required mortgage amount.

To overcome the rental income deficiency we were able to use the client’s rental income from an additional unencumbered buy-to-let property they owned. This allowed the client to use both rental incomes to meet the mortgage affordability criteria. The lender we sourced also accepted the husband’s British passport and the wife’s Hong Kong passport.

Furthermore, in regard to the negative trading balance, we established that certain expenses were a one-off. Without these expenses the business would have been in a profitable position. We used the management accounts to demonstrate this to the lender.

The clients were happy with the mortgage terms, and were able to secure funding to purchase their new buy-to-let property.

There are 1 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Mark-Dryden-V2
A digital mortgage process will need intermediary and lender co-operation

Coming from an intermediary perspective, there’s always something slightly sinister when lenders talk about the digitalisation of the mortgage process.

Close