This week's case study highlights how Alexander Hall helped a couple release equity from their property to carry out home improvements.
Our clients' challenge
Our clients wanted to release some equity from their property in order to carry out some home improvement work, as they had recently obtained planning permission for an extension. The existing mortgage debt and the additional lending needed for the works, required a total loan of £825,000. Keeping the monthly payments as low as possible initially was key to our clients, as they have monthly school fees to pay of £2,500, which are payable for another two years.
Our clients knew that once the extension works were complete, the property value could increase significantly, which would give them the means to sell and buy a new home elsewhere. For this reason, they wanted the flexibility to sell the property without any early repayment charges on the mortgage. There was some further complexity to the case in that the applicants had variable bonus and self-employed income, all of which would need to be fully utilised to obtain the required lending.
Alexander Hall's solution
In order to get our clients the loan amount required, we needed to use a lender who would use a higher than average percentage of the bonus income for the first applicant. The second applicant is a self-employed limited company director with fluctuating income. The latest year’s income was lower than both 2017 and 2018. The dividend the client paid himself was higher than the year’s net profit as the company had a lot of retained profit.
We supplied the lender with an accountant's explanation and they were happy to accept this. The client borrowed the full amount at a rate of 1.64% (which they were delighted with!)
