Key details
- Clients: UK National and Resident
- Property type: Detached house with annex and 10 acres of land split over 5 titles
- Property valued: Total £3,000,000
- Loan: £1,800,000
- LTV: 60%
- Interest rate: 2-year fixed at 7.34%, 0.5% fee
Summary
In this case, we were approached by a client looking to purchase a new family home near Knutsford, Cheshire, with an asking price of £3,000,000. The client wanted to use their income as a director and 100% shareholder of their Law practice for affordability.
Working solely off this income for affordability was out of the question because the client took home a minimal director's pay and dividends each year to reduce their fiscal obligations. In addition to this, the property being purchased also caused an issue as well as the main house, the property had an annex on a separate title and 10 acres of land split over 3 more titles. This ruled out a lot of lenders as they could only lend on the value of the main house instead of the combined value of the 5 titles.
We found a lender who could monetise the significant retained profits within the company for affordability allowing the client to borrow the full loan required to purchase the property, without incurring a further tax liability but being forced to draw additional dividends from the company. The lender was also happy to lend off the combined value of all 5 property titles due to the property’s good location and reselling potential.
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