How two applicants with varied income sources secured their first home.
The Situation
Our clients were their first step onto the property ladder. Having rented for a number of years, they made the decision earlier this year to stop paying someone else’s mortgage and make a purchase of their own. After a period of searching, they had an offer accepted on a detached four-bedroom family home, a significant and exciting milestone for them both.
The purchase price required a high income multiple, and with two applicants whose income profiles were anything but straightforward, careful structuring of the application was essential from the outset.
The Challenges
Several factors needed to be navigated carefully to present the application in the strongest possible light.
The first applicant is a self-employed dentist operating as a sole trader. Her income had varied considerably over recent tax years. Understandably so, given that earlier years were impacted by training and associated expenses. More recent accounts reflected a significantly stronger and more stable earnings picture, and it was important to work with a lender who would take a sensible view of that trajectory rather than simply averaging figures across all available years.
The second applicant is employed in a permanent full-time role. He had also recently commenced a second employed position, though as this role had only just begun, it could not be included in the affordability assessment at this stage. Additionally, a one-off bonus had been confirmed in writing for the current year, though as this was not guaranteed beyond this point and had no prior history, it was treated with caution in the application.
On the credit side, steps had already been taken to strengthen the application ahead of submission. An unsecured loan had been repaid in full using a family gift, supported by a gift letter and written confirmation from the bank. One credit card was to be cleared before the application was submitted, and the remaining balance on a second card was accounted for in the affordability assessment.
The Approach
Given the complexity of the income picture, lender selection was critical. Our Just4Dentists partner identified a lender willing to assess the self-employed income using the most recent year’s accounts reflecting the applicant’s current earning capacity, rather than applying a blended average that would have understated her income.
The second applicant’s new role was documented thoroughly on file, including his contract and first payslip, though income from this position was excluded from the application in line with lender requirements. His primary employed income and pension deductions were factored in accurately.
All credit commitments were carefully considered in the affordability calculation, including car finance, the retained credit card, and running costs for two vehicles. The loan repayment was evidenced clearly, and the lender was made aware of the family gift used to clear it.
On retirement age, both applicants expressed a clear and considered intention to work until age 70. They are fit, healthy, and motivated to remain in work, a position they arrived at independently and were able to articulate confidently. This supported a mortgage term aligned to their retirement age, keeping monthly repayments manageable.
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The Outcome
A mortgage was secured on a capital repayment basis, with a three-year fixed rate to provide certainty in the near term while retaining the flexibility to review the position once rates had shifted. The product fee was added to the loan to preserve the clients’ available cash, with the cost of doing so fully explained and understood.
Monthly repayments came in at a level the clients were comfortable with. These were notably less than the combined cost of their current rental outgoings when considered in full household terms.
Looking Ahead
For this couple, the mortgage is just the beginning. They are now homeowners for the first time, with a long-term repayment plan in place and a clear picture of their financial commitments going forward. As the second applicant’s new role becomes established and his additional income can be considered in future applications, their financial position is only likely to strengthen over time.
