Who did we help?

Josie and Jack, are a middle-aged couple from Cumbria who were referred to us by a broker based in our Cumbrian heartland. Jack is a Limited Company director and had recently changed the shareholding in his business to add his wife to the ownership. They currently live in a four-bedroom house worth £350k, with an outstanding mortgage of £145k. The couple have £45k in savings.

What did they need?

When a bungalow close to their existing home unexpectedly became available, Josie and Jack saw an opportunity to plan ahead for later life and remain in the village they knew and had loved for many years. 

However, with limited housing stock of this kind in the area and the bungalow readily attracting interest from other buyers, the couple had to act quickly. They required funds to enable them to purchase the £250k property before the sale of their existing home took place.

Why were they facing challenges?

The couple required a short term lending solution that would provide a loan to purchase the bungalow - but the value of their existing home minus their outstanding mortgage meant affordability fell short for the 60% loan-to-value ratio required for this product.

A further challenge was presented by the recent change in shareholding in Jack’s Limited Company, which had the potential to affect profitability.

Fortunately for Josie and Jack, their broker has worked with us for many years and is familiar with our flexible approach to underwriting plus our willingness to consider collateral charging.

How did we help?

Our Business Development Manager worked closely with our underwriters to establish that a collateral charge on both the existing and new property (totalling £600k) would offer the value needed for a 60% LTV (£360k). However, we limited this to £350k to align with the value of their current property. 

When the couple’s existing mortgage balance had been taken into account (£145k), the value of £205k could then be supplemented by the couple’s savings (£45k) to reach the loan required. 

In order to satisfy the requirements of the collateral charge, the couple were required to arrange valuations for both properties and there needed to besufficient equity when they sold their current home to redeem the short term lending mortgage within the required two years. We also ensured their income covered both property expenditures and commitments.

Our underwriters also studied the Limited Company management accounts to identify that the change in shareholding had no effect on turnover or profit, both of which had been consistent for several years.

Could collateral charging and our short term lending solution help one of your clients? Give our Furness for Intermediaries team a call on 0800 988 1561 or contact your Business Development Manager.