This case study is based on real clients who had issues getting their loan approved due to being short term self employed. For the purposes of this article we’ll call them Jack & Jill. The names & certain details have been changed in the interest of privacy for the borrowers, however the key facts and how we were able to solve their problem remain the same.
Jack and Jill were having trouble getting finance, as they had only been self employed for around 15 months. Most lenders will require you to show 2 years tax return when self-employed in order to evidence your ability to repay a loan.
Given that the business had only been trading for a short time frame, Jack and Jill could not meet that requirement.
On digging deeper into their situation, we discovered that whilst the business was fairly new, the applicants had a large amount of experience in the industry. They had been in a similar employed role to what the business was doing for approximately 8 years prior.
We were able to show that the business had very low outgoings, as either Jack or Jill carried out most of the work themselves.
It is also important to note that Jack and Jill held good equity in their current property which went a long way to helping get their new loan approved.
In order to evidence the income, we obtained history on his earnings in is previous roles and had an accountant prepare financials to show that the new business was trading profitably. Armed with this, we were able to get Jack and Jill’s loan approved.
Jack and Jill had previously been knocked back for finance by a bank they had been loyal to for many years and were currently funding their existing home loans. We were able to find a lender who offered a superior interest rate and more importantly, offered them the loan amount they required.