Behind most glamorous job titles hides the minutiae of tax returns, accountants’ records and company ownership structure — which means even those whose success takes them all over the world can struggle to finance a property purchase.
I recently secured a mortgage for an international DJ, whose work takes him all over the world. As such, he is paid in quite an unusual way, receiving intermittent sums — often in foreign currency — from global locations.
My client and his wife were looking to purchase a beautiful new family home, valued at just over £2m. They had a healthy deposit of roughly 25%, which is an excellent position to be in. With over a decade of success in his industry, my client was also able to demonstrate a clear plan for the future that he would continue to be paid successfully.
However, my clients faced some issues in terms of demonstrating affordability — and this was a result of how my client was paid. He had already been turned down by a high street lender. Interestingly, the problem here was not that he was a DJ, which is an unusual career — but rather a much more mundane problem, faced by business owners across the UK.
Limited company director
He was classed as self-employed, and paid himself via his Private Limited Company (LTD). Although my client was earning an excellent income, himself and his wife — who was also a director of the business — paid themselves a small basic salary and dividends.
For tax purposes, directors of limited companies will often not draw the full share of the profits held in the business. This was the case for my clients; they had chosen to leave most of the profits in the business. The vast majority of lenders will calculate affordability on the basis of what has been drawn and is shown in accountants’ records, not the net profits in the business.
My clients were also keen to avoid placing assets under management, which meant there was a very narrow pool of lenders available to us.
Fortunately, I have an excellent relationship with a lender who could take the full share of profits into account when calculating affordability. This meant my client could borrow the amount the required, and at a very competitive interest rate.
Although his role is glamorous and quite niche, this case is applicable to a wide range of business owners. Whether you’re a globe-trotting DJ or a businessperson, ultimately, you may also be looking for a mortgage with a lender who can consider you on similar terms discussed here.