He had spoken to his bank and his parents’ bank about mortgages, and they had told him that his maximum budget for purchasing was around £440,000. However, he realised he needed a minimum of £550,000 to purchase the type of property he desired in Bristol.
With no access to additional funds and no expected pay raises, he felt uncertain about his options as a first-time buyer. It was then that a friend suggested he reach out to a broker, and that’s when he approached us for assistance.
Despite earning a good amount of money, approximately £85,000 per year, Mr. Faulking’s income was largely commission-based and not guaranteed.
Although he had been receiving a steady level of commission income for over 2 years and was confident in his ability to maintain it, the two banks he had approached did not share the same confidence. They were only willing to consider 60% of his commission earnings when assessing his mortgage eligibility.
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The client, Mr. Faulking, had a deposit of £82,500 and earned a basic salary of £50,000, with a non-guaranteed commission income averaging around £35,000 annually.
The first two banks he approached in Bristol used only 60% of his commission income, resulting in a total income of £71,000 when combined with his basic salary. They offered him income multiples of 5 times his income, which amounted to £355,000. With his £82,500 deposit, this enabled him to purchase a property of around £437,500.
- £50,000 Salary
- £35,000 average annual commission
- £82,500 deposit
- Initial banks offered £355,000 mortgage
- Enabling £437,500 purchase
The client found that the amount offered by the banks was insufficient to purchase the type of property he desired, and he believed it did not accurately reflect his earnings.
We were able to identify a mortgage lender who viewed the client’s income more favourably, taking into consideration 100% of his commission earnings along with his salary, resulting in a total income of £85,000.
Additionally, this lender offered higher income multiples of 5.5 times the income, which had a compounding effect and allowed the client to borrow significantly more. As a result, the client was able to borrow £467,500 instead of £355,000, which was £112,500 more than the initial banks he had approached.
- £467,500 mortgage
- £82,500 deposit
- £550,000 purchase
This enabled the client to buy a 3-bedroom house in the area of Bristol he wanted, allowing his two children to stay with him on weekends. Previously, he had been considering properties in the wrong areas or with insufficient bedrooms or space to meet his needs. This experience underscores the importance of shopping around and exploring different options, as well as seeking professional assistance, to find the best mortgage solution.