Our client owned 31% of the shares in a company. She had recently transferred half her shareholding to her husband. Both clients received their income mainly in dividends. They required a £600k mortgage to purchase a new property for £1.5m. The client’s mortgage application had recently been declined by their bank. The clients were now under time pressure to exchange within 4 weeks.
We were able to secure a deal on the lowest cost 5-year fixed rate in the market. The mortgage application was completed from submission to offer in less than 2 weeks.
The client faced two main issues. Firstly, when shareholdings have recently changed many banks require at least 12 months trading under the current structure before they can consider an application. In addition, many would require at least a year’s full accounts under the new structure.
The second issue was the fact that the applicants withdrew their income as dividends, but they now owned less than 20% of the company. Many banks will only consider dividends as income if an applicant owns more than 20% of the company.
To secure the approval, a business case was prepared with commentary from the client’s accountants confirming that the day-to-day operation of the company had not been impacted.
They also provided up-to-date management accounts and company bank statements to show that the level of trading was unaffected by the change of shareholding.
We were able to approach our contacts at the underwriting team of a major bank. They were able to take a common-sense approach and consider that the applicant’s combined 31% shareholding had not changed.
“The mortgage application was completed from submission to offer in less than 2 weeks.”
The clients were delighted to not only secure a mortgage within the required timescale but to have secured such a low mortgage rate.
