The following example, although hypothetical, is typical of the type of situation which many self-employed people face.
David the graphic designer
David is a graphic designer with more than 15 years experience working for a leading design agency.
He has been responsible for creating a number of award-winning advertising campaigns and running a department of more than 12 designers, who produce both digital and print work for a number of leading consumer and business-to-business clients.
Just over 18 months ago, David decided the time had come to break away from his employer and set-up his own agency. He knew he had the skills and experience and was confident that he could quickly build-up his own client base. But rather than simply handing in his resignation, David discussed his intentions with his boss who agreed to sub-contract some work to David, which would help during really busy periods.
This arrangement gave David the confidence to make the move and he set up his own agency, initially targeting leading retailers and online traders. His confidence was justified as new business started to roll-in and, before long, David had employed 3 additional designers and signed a lease on a studio within walking distance of his home. There was no looking back; the business was growing rapidly and going from strength-to-strength.
At the end of his first year, David’s accounts told an upbeat story with healthy profits and his combined income and dividend payments exceeding his salary as an employee. He therefore decided to celebrate by replacing both the bathroom and kitchen in his home, which were long overdue a facelift.
But when David tried to remortgage to raise the additional finance he needed, he was surprised to discover that several lenders wouldn’t consider his application because he had only one year’s accounts to show. He pointed out that he was trading profitably and had a growing order book and income stream, but his words fell on deaf ears.
David therefore decided to speak to a local independent mortgage broker, who recommended Saffron’s specialist Self Employed Mortgage. He explained to David that Saffron was willing to accept his first years’ accounts along with a projection of his future earnings and sight of 6 months’ personal and business bank statements.
Saffron was able to offer David a 5-year discount with no Early Repayment Charges and gave him the facility to make capital repayments at any time and reduce his mortgage interest rate when his outstanding balance dropped into a lower loan-to-value band. This facility, which is free of charge, was of particular interest to David as it meant that if his business continued to perform well, he could pay off his mortgage sooner and benefit from a lower mortgage rate in the meantime.
Saffron’s Self Employed Mortgage was the perfect solution to David’s needs.