30 May 2023

Self-employed case study - Working with complex income circumstances

By Furness Building Society

Who did we help?

Paul is self-employed and has been running an online textile company for five years. The business made a loss in the first year, a small profit in year two, another loss in year three and increasingly good profits in the past two years.

Paul’s wife Katie is a head teacher. Their living costs are modest and Katie earns a good income. For this reason, Paul only takes a low salary and minimal dividends from his company, choosing to leave most of the profit in his business.

What did they need?

Paul and Katie were keen to move into a larger property.

Why were they facing challenges?

Paul and Katie’s broker found that some lenders will only use the income and dividends drawn from the business to assess affordability.

This didn’t provide enough income for them to secure the size of home they wanted.

How did we help?

We studied the pre-tax profits from Paul’s business and added back his salary to this figure to provide a total income.

An average of the last two years’ figures didn’t provide enough borrowing capacity but we worked with Paul’s accountant and obtained management accounts for the past six months. We were then able to satisfy ourselves that this was a growing business and could safely base our calculations on the most recent year of trading.

Could our flexible approach to lending help one of your self-employed clients? Give our Furness for Intermediaries team a call on 0800 988 1561 or contact your Business Development Manager.

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