A broker came to us with a case for two borrowers looking for debt consolidation, in addition to raising funds to repay a family loan and raising capital to complete a loft conversion. The broker referred the case to our underwriting team ahead of submission, which allowed us to confirm the income was acceptable early on and keep things moving once it came through formally.
The Challenge
One borrower was a self-employed limited company director and 100% shareholder. Although the company was turning a strong profit, the borrower was only drawing around 60% of that as dividends, meaning they couldn’t reach the required loan size on their current drawings alone and needed us to consider part of the undistributed net profit on the basis this is readily drawable.
Our loan was also being used in part to repay money borrowed from family and friends, which had funded the start of the property works. Because these funds came from private individuals rather than a lender, we needed to verify the loan purpose carefully.
The Fix
Placed on our Prestige 1 product at 10.35%, the case completed within 7 working days of submission, including a full valuation carried out during underwriting.
To get comfortable with the income, we obtained a reference from the borrower’s accountant confirming that as 100% shareholder, they had full control over their drawings and could take a higher dividend if required. This was backed up by two years of strong retained profits in the business. We also verified the accountant’s qualifications and obtained a projection for the current trading year, which showed expected profit in line with the previous two years.
To evidence the loan purpose, we collected trade quotes for the loft conversion alongside historic bank statements showing the funds lent by family and friends that the borrower was looking to repay – giving us everything we needed to fully satisfy the purpose of the loan.
The Benefit
By taking a closer look at the business rather than just the borrower’s current drawings, we were able to use a higher income figure in the affordability assessment, allowing the borrower to fully realise their goals of debt consolidation and home improvements. Because the broker referred the case ahead of submission, we could make key decisions early, and the loan completed within a week of being received and the borrower was able to get on with their loft conversion without delay.
If you want to sense- check a case, get in touch with the secured loans team today – we’re ready when you are.
