How to Buy a £1.35m Property Without Using Your Own Cash

The Scenario

This case study illustrates how a business owner successfully purchased a £1.35 million property without using personal savings or company reserves. The objective was clear: retain full liquidity while funding the purchase entirely through borrowing, all while keeping monthly repayments to a minimum.

The Challenge 

This was significant. The client had a modest personal income from salary and dividends, substantial retained profits within the business, and a need to borrow the full purchase price. Additionally, existing buy-to-let properties complicated the lending process, as most lenders assess affordability based solely on personal income. Consequently, the client faced rejection from lenders who deemed the required borrowing level unachievable.

The Strategy

To overcome these obstacles, our strategic approach involved:

• Identifying lenders willing to consider retained business profits alongside personal income.
• Structuring part of the borrowing on an interest-only basis to minimise monthly commitments.
• Leveraging the existing buy-to-let portfolio to support additional borrowing.
• Utilising top slicing to combine personal and business income, enhancing lending potential when rental income alone fell short.

The Outcome

The final structure resulted in a fully debt-funded purchase, with £600,000 secured on an interest-only basis for the main residence and additional borrowing raised against the buy-to-let portfolio. 

The rental income from one buy-to-let property fell short of the traditional stress-test requirements. This is where we identified a lender willing to use top slicing, again, considering his salary and retained profits, to bridge the gap

All lending was maintained at or below 75% loan-to-value on investment properties, with a 10% annual overpayment facility included for flexibility.

The Result

The client secured the full £1.35 million purchase entirely through borrowing, without using personal savings and while keeping company reserves intact. Monthly repayments were minimised, and long-term flexibility was preserved. 

Key Insight

For business owners, borrowing capacity is often limited not by income itself, but by how that income is interpreted. Lenders who understand retained profits and business structures can significantly enhance borrowing capacity and create more flexible repayment options, aligning lending with the realities of business income generation. In complex cases, the right structure can unlock opportunities that standard approaches may overlook.