When you are coming to the end of a fixed rate deal, most homeowners like the protection of knowing what their new monthly payment will be. Moving to another fixed rate product gives you this protection. Whilst allowing you to choose the new fixed term, most suitable to your circumstances and future plans. Approaching high street lenders direct will often mean you have to provide strict evidence of income. This can be difficult especially if you are self-employed. And staying with your existing lender – for ease, is likely to mean that you are missing out on a better rate elsewhere. So can a mortgage broker help complete a remortgage for a sole trader?
At 177 Mortgages we have developed great relationships with a wide range of lenders. So when it’s time to start looking for a new fixed rate mortgage using a mortgage broker can help you overcome these difficulties. Take a look at how we recently helped a customer with their remortgage to a fixed rate product.
Client: A Dental Hygienist who had been a sole trader since April 2013. They had maintained a good and consistent income since they started trading. However, with the restrictions that were put in place due to Covid, this income reduced dramatically during 2020. During 2021 the client also chose to complete further training, to continue their professional development and strengthen their business. This also reduced their level of income compared to previous years before Covid.
Scenario: Their current fixed rate mortgage was coming to an end, and their property required remedial work due to the new cladding regulations. This meant that there was a need for a small amount of additional borrowing to pay for these works. Their current lender was no longer competitive following the rate rises that happened in 2022. They had been unsuccessful when they approached other lenders directly, due to the two most recent years’ accounts. The reduced income fell short of what was required for the existing mortgage and wouldn’t allow any additional borrowing.
Challenge: The accounts from the two previous years showing reduced income were the two years that most lenders will use to assess income. Added to this, the property was on the 21st floor of a building in London that was subject to the remedial cladding work following the Grenfell Towers fire.
Solution: After the client came to 177 Mortgages, one of our specialist team who are experts in managing applications for self-employed homeowners prepared the case. They discussed the case with several lenders. One of the leading lenders agreed to complete a bespoke underwriting for the case. They agreed to use the most recent year’s income – net profit, even though this year’s accounts had not been finalised. They were satisfied that the case as a whole looked good and that the client’s income was increasing above that of pre-covid levels. They were also happy with the explanation for the reduced income due to the professional development that they completed beyond the period of covid restrictions. And could see the additional income that this training was creating. The lender was also able to offer the client a fixed rate mortgage for the period that they wanted.
Outcome: Using our existing relationship with the lender we were able to secure the client a remortgage deal that met their requirements. Having this relationship with the lender allowed us to tell the story that sat behind the numbers. Sometimes sole traders are more than just their last two years of accounts! Thanks to our tenacious approach and the bespoke solution provided by the lender the client was able to remortgage and pay for the remedial work required.
Using 177 Mortgages to find your help you remortgage as a sole trader is fee-free. If you’re simply looking for a new fixed rate or your circumstances have changed, and you have more bespoke requirements. Or perhaps you’re looking to borrow more money – get in touch with us today.