Mind the Gap
A few days ago, I spoke with a previous client of mine, who is a small business owner and Landlord. As we got to talking, I could see that he was leasehold/freehold lender sceptic — he’d been reading too many news articles and didn’t believe in the power of a lender meeting his part-owning a freehold and fully owning a leasehold on the same property, and wanting to capital raise against it. ‘Lender science is not for those who don’t practice the art’ he kindly said. It wasn’t altogether surprising; he’d had a tough challenge the last time around with weak rental incomes and had almost given up hope of a fair deal (the free valuation was a bonus).
It’s true that lenders are employing stricter limits and competitive rates and there’s more paperwork, but some lenders will look at a most recent 1-year net profit instead of an average of two years net profit before tax. Such things are why some lenders aren’t always an obvious choice.
It’s the interpretation of the lenders’ application which is integral to discovering if something can be done and if it’s the right `fit’ to use or not, and that goes for any type of borrowing. The structured approach is pivotal to long-reaching benefit decision making. Fortunately, as this was a previous client he understood. He also knew there was no getting around involving organized accounts and having validations to hand to be able to answer the question ‘what do I look like to a lender?’ before we could get to correlating products, lenders, and amounts.
Finding standard finance, a mortgage or loan `on paper’ doesn’t take or need experience but understanding the lending methodology does.
Article credit: Copyright SUF © 2019
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