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For nearly two decades, Davenport Thomas’s highly experienced team has worked closely with numerous accountancy practices to support their clients with a wide range of financial planning needs.

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Understanding specialist mortgages

21st Feb 2024
Brought to you by
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For nearly two decades, Davenport Thomas’s highly experienced team has worked closely with numerous accountancy practices to support their clients with a wide range of financial planning needs.

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Have you found this content useful? Use the button above to save it to your profile.

In today’s dynamic employment landscape, contractors and individuals running limited companies often find themselves facing unique challenges when it comes to securing mortgages.

Understanding specialist mortgages | Davenport Thomas | The Real estate agent mortgage Home Model. The real estate agent explains the business contract, rent, purchase, mortgage, loan, or home insurance buyer concept.
Getty Images - David Gyung - mortgage

While traditional high street lenders typically rely on standard metrics such as salary and dividends to determine loan eligibility, limiting choice and the amount that can be borrowed, independent mortgage specialists such as Davenport Thomas have a long-established understanding of the complexities inherent in contractor and limited company finances. We recognize that income streams can vary significantly from traditional employment structures.

 

Mortgages to reflect true earnings potential

From our experience, we can access a number of lenders who are more receptive to unconventional income sources. While high street lenders may cap borrowing at salary plus dividends, we can tap into lenders who consider criteria such as daily contract rates, net profit plus salary, or even gross profit plus salary. To maximise borrowing capacity, it may also be possible to take into account a spouse or partner’s dividends. We can therefore offer a wider choice of mortgage options, enabling our clients to secure financing that accurately reflects their earnings potential.

An example to illustrate

We recently advised a company director who has been a contractor for many years and was looking to move house. He had only recently started a new contract on a daily rate of £1,800. The contract is through his limited company from which he takes income of £100,000 a year. He was looking for an interest-only mortgage and needed to know the maximum borrowing available.

 

We obtained an agreement in principle from a lender who would allow him to borrow £2.05m on an interest-only mortgage with 70% loan-to-value (LTV).  This lender would lend 4.75 times his annual contract income based on 240 working days a year (£1,800 x 240 x 4.75). This meant that the client was able to search for a house with confidence, knowing his maximum budget for a property.

Contact us  

Roebuck is an appointed representative of Davenport Thomas was set up to help provide accountants with a solution to their mortgage and protection advice requirements. We understand the complex mortgage needs of contractors and business owners, so for a discussion about how we can help, you can book directly into David’s diary via Calendly, email or call.

David's contact details are:

Calendly - David Fear

Tel number 0208 8192407

Email is [email protected].

 

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As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments

Davenport Thomas is a trading name of RJM & Associates (Hampton) Ltd which is authorised and regulated by the Financial Conduct Authority.