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

by: Noel Edmonds, mortgage manager,
  • 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 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




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.

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