First Time Buyer – Ltd Co Director – Spike in Net Profits.

Our client was looking to purchase his first residential property. As a Ltd Company Director, he owned the business for 6 years. His accounts showed increases in profit for 3 years and then a big drop in 2019. This was due to higher overheads for premises and staff. He was able to see the rewards of this in his 2020 accounts as the profit was back up to the same level as 2018. Covid 19 was a turning point for him as with many business owners and re-evaluated the business costs and reduced the overheads by taking a virtual office and working from home, and taking on more free lancers rather than contracting employees. When applying for a mortgage the underwriters had concerns over the drastic increase in profit and initially were looking to average the last two years figures – this would have reduced his loan down by over £150k. We were able to explain the business, provide management figures for 2021 and give the underwriter details of the clients he was dealing with. This resulted in an overturn of the decision and they were able to give him the loan amount he needed based on the 2020 figures. This is a typical scenario we see on a daily basis as young professionals will take risks with their business to increase revenue and at the same time be mindful of climate changes where they also need to scale back to ensure they are able to retain the profit levels. We pride ourselves on knowing and understanding not only our clients, but also their business very early on in the mortgage process so if a situation like the above arises, we are confident we can represent you with the lenders and obtain a positive result! To discuss your mortgage in the strictest confidence please get in touch using the below form.