However, on a micro level, different events may have stood out to brokers, so this week Mortgage Solutions is asking: What is the most memorable or quirky case you’ve placed in the last 12 months?
Last year I completed a £1.5m loan for a business owning client, who was finishing the development of his new £4m house. Due to the condition of the property at the time of application, we obtained funding from a private bank allowing repayment of their existing development loan and further funds to finish the works on the house.
Some time after completing on this mortgage, we spoke with an alternate lender as the client would have new and improved company accounts. I re-approached my client with the opportunity to change to a high street bank, with cheaper pricing and the ability to raise an extra £50,000 towards landscaping, based on the previous valuation figure of £4m, which we now considered conservative.
After submitting the case to the bank, the surveyor came back to us with a significant down-valuation to just £2.5m, meaning the loan and affordability would no longer fit lender criteria.
The client spoke to local estate agents to obtain evidence of the property’s true value and, much to the client’s delight, they received an unsolicited offer of £4.5m for the property. Unfortunately for us, this would mean they no longer required the remortgage loan on offer.
After some extended discussions between the bank and myself, they agreed to create a bespoke product with no redemption penalties, not usually allowed above £1m, so the client could still refinance with them based on the £2.5m valuation.
This allowed the client to raise the additional £50,000 for their additional works and, if they chose, sell the property at the £4.5m offer.
We’ve had two – firstly, we organised a mortgage on a property where the clients rented an unmortgageable apartment with no kitchen, bathroom and which was in an almost derelict state.
While agreeing an option agreement to buy it at £650,000, they invested £150,000 into the refurbishment. We organised a loan of £700,000 on interest-only terms based on the value of the property after the works were completed and a value of £950,000 was placed upon it.
We also had to remortgage two further properties on a cross-securitised bridge to provide funds for the development.
The second case was for a doctor who had no taxable income. He had sold his limited liability partnership (LLP) to a new limited company he also owned.
Included within the sale was a significant value attributed to the LLP’s goodwill to the company – this would represent a capital disposal for tax purposes which would be assessed on individual members of the LLP. This could result in a significant reduction or elimination of the amounts owed by members to the LLP.
What this meant was that for the preceding five years after the sale, the doctor had been drawing a small basic salary, but all of his dividends had been taxed as withdrawal of a director’s loan outside of tax, which was paid on the ‘sale’ at a rate of 10 per cent. Most lenders would look at his £10,000 taxable income and borrowing requirement of around £500,000 and say no.
We were able to find a lender who included the amounts being drawn under the goodwill sale and since these were similar to his total taxable income prior to the sale, were happy to lend the full amount. The six lenders he had previously approached, both direct and via other advisers, declined.
The most challenging case I have had to deal with recently involved a married couple with three children, looking to move from a small rented flat to a larger detached house.
Nothing unusual there, but the husband was completing a degree and not working, so the wife – who was the client – was doing two jobs to support that. Both had adverse credit, so we had to go to a specialist lender and there was a continuous need to provide ever more detailed information.
To make matters worse, some of the deposit was held in a foreign exchange account and at one point the client decided to lend some of it out to her relatives as she felt they needed the money. I had to be very patient when I found this out.
The underwriter told me later that they should probably have declined the loan but with a bit of positive thinking we managed to get it over the line. The family has now moved in and the husband has completed his studies and is now earning, so it’s all worked out well.
The client was so happy when I told her the loan had gone through that she literally squealed with delight down the phone, and they’ve since invited me round for tea.
To make it even better, the vendor has been able to move to a new home just a few doors down from his new grandson so he can spend a lot more time with him.