Mr R approached us for assistance in buying his new home. He was in the process of finalising a long and acrimonious divorce and his soon-to-be ex-wife was a partner in his business. Although she was a silent partner; living some miles away and not active in the day-to-day running, she had been receiving half of the net profit. The partnership was trading well and was making around £100,000 pre-tax profit and had been stable at this level for several years.

Mr R was in his early fifties and he had every intention to keep working past state retirement age, well into his mid-seventies and he wanted as long a mortgage term as possible, so that the monthly payments would be affordable.

The problems that Mr R had faced looking for his next mortgage were two-fold. Firstly, all the lenders that had been approached would only work on what Mr R had earned over the previous three years, which, because his ex-wife had been receiving half the income from the business, meant only £50,000. Added to this was the issue that the lenders were only willing to consider a mortgage up to his state retirement age, not the age he intended to work until. The net result was that Mr R was significantly short in meeting his mortgage requirement.

We approached a building society and presented Mr R’s circumstances. We explained that Mr R’s ex-wife had no involvement with the business other than being an equity partner and the partnership would dissolve on completion of divorce, this was supported in writing by the clients’ accountant. We also explained that Mr R would continue in the same business, trading under the same name and in the same premises. The lender accepted that the “sleeping partner’s” exit from the business would not materially impact its future performance and also critically, that our client was solely responsible for its past performance. As a result the lender was willing to allocate 100% of the partnerships previous declared net profit to our client for mortgage purposes.

In addition, because the clients business was not heavily manual and in his sector many practitioners continued working until their late seventies, the lender agreed a mortgage term up to the clients 75th birthday, this added an additional ten years to the mortgage term, meaning that the monthly payments were significantly lower and well within the clients current and anticipated earnings.