Case study
How we helped a sole trader secure a £1.08m mortgage after mainstream credit declines.
Case summary
Client type: Sole trader returning to homeownership after renting
Income profile: Latest-year profit more than double the previous year
Income multiple: 5.5 times income
Credit history: Isolated historic defaults on telecoms and mail-order accounts
Mortgage purpose: Residential purchase
Property value: £1.35 million
Mortgage required: £1.08 million at 80% loan-to-value
Repayment structure: Part repayment, part interest-only, with the majority on interest-only
The client
Our client was a sole trader looking to return to property ownership after a period of renting.
They wanted to purchase a £1.35m home and required a mortgage of £1.08m. Their business had grown substantially, with the latest year’s profit more than double that of the previous year.
However, isolated historic credit issues had led to declines from mainstream lenders using credit scoring.
The situation
The application needed a lender willing to assess the client’s credit history individually while also taking a considered view of the recent increase in business profits.
The borrowing required an income multiple of 5.5 times and represented 80% of the purchase price.
Monthly cost was another important consideration. The mortgage therefore needed to combine capital repayment with a substantial interest-only element, rather than placing the entire loan on a repayment basis.
Finding a lender comfortable with each of these features together was central to the case.
The credit challenge
The client’s credit record included historic defaults relating to a telecoms bill and a mail-order account.
Although these were isolated issues, they had prevented the application from progressing with mainstream credit-scoring lenders.
The case required a lender prepared to look at the nature, age and context of the defaults alongside the client’s wider financial circumstances. We needed an individual assessment of the credit history, rather than another application dependent on passing an automated score.
The variable income challenge
The client’s latest-year sole-trader profit had more than doubled.
That growth strengthened the potential affordability position, but it also required explanation. The lender needed to understand what had driven the increase and whether the latest results represented a sustainable level of earnings.
An assessment based on an average of the earlier and latest years would not fully reflect the business’s recent performance. The case therefore depended on a lender willing to give appropriate weight to the stronger latest-year figures.
The loan size challenge
The required £1.08m mortgage represented 5.5 times income and 80% of the property’s value.
The lender needed to be comfortable with the loan size and income multiple alongside the client’s self-employment and historic credit issues.
These factors could not be considered separately. A lender willing to take a flexible view of the credit history might still be unable to support the borrowing required, while another accepting the income level might decline on credit score.
The repayment structure challenge
The client wanted to manage the monthly cost of the mortgage in line with varying monthly income, making a fully repayment-based arrangement less suitable for their objectives.
The solution needed to combine repayment and interest-only borrowing, with the majority of the balance on interest-only.
This required the lender to assess both the affordability of the monthly payments and an acceptable strategy for repaying the interest-only capital. Lower monthly payments would not remove the obligation to repay that balance.
Our solution
We arranged a £1.08m mortgage with a lender able to consider the complete circumstances through an individual underwriting assessment.
The approach allowed the historic defaults to be considered in context, alongside the client’s business performance and the substantial increase in sole-trader profits.
The resulting mortgage supported borrowing at 5.5 times income and 80% loan-to-value.
We also arranged the loan on a part-repayment, part-interest-only basis. This allowed some capital to reduce through the monthly payments while keeping the majority on interest-only to manage the ongoing cost.
Our client’s outcome
The client secured the £1.08m mortgage required for their £1.35m home purchase, providing a route back into property ownership after renting.
The arrangement brought together an individual assessment of the historic credit issues, recognition of the stronger business profits and a repayment structure suited to the client’s monthly budget.
It demonstrated how a case declined by mainstream credit-scoring lenders could still find a workable solution when the borrower’s circumstances were assessed in full.