The Intermediary – September 2026 - Flipbook - Page 58
SPECIALIST FINANCE
Opinion
The case is there,
the paperwork just
has to say so
M
ost of the complex
income cases
that land on my
desk have already
been declined
somewhere else.
Nearly always because the file did not
explain itself, and nobody had the
time to ask.
10 years ago, the problem was
finding a lender with the appetite.
Today, building societies and specialist
lenders have leaned into manual
underwriting, precisely because the
workforce stopped fiing the matrix.
What has not changed is how lile
time an underwriter has to reverse
engineer a set of accounts. The skill is
no longer placement. It is packaging.
Where cases actually stall
When a complex case sticks at first
assessment, it is rarely earnings. It
is that two documents disagree, and
nobody has said why.
Automated criteria capture salary
and dividends drawn, and nothing
else. A limited company director
who leaves profit in the business
for perfectly sensible reasons then
looks poor on paper, which is really a
mismatch between how directors are
advised to pay themselves and how
affordability gets measured. Plenty of
lenders will assess share of net profit
instead, but only if you set out the
shareholding and show the balance
sheet supports it.
For contractors, the gap
between assignments can look like
unemployment. Umbrella payslips
with several statutory deductions look
alarming to anyone who has not seen
that structure.
Then there is layered income.
Salary, bonus, vested shares and a
bit of freelance work. Every lender
treats those streams differently. Some
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The Intermediary | September 2026
haircut the variable element, some
average it, some want proof it will
continue. You cannot control which
approach applies. You can control
whether the underwriter has to guess
what each figure represents.
The client’s accountant is the most
useful person in a complex case,
and the one brokers speak to last.
The accountant has spent the year
legitimately minimising taxable
profit. The underwriter is trying to
find sustainable cashflow. Both are
right. They just do not produce the
same story.
There are three things I sele before
anything goes in. First, do the SA302s
and the tax year overviews match? If
a return was amended, or a balancing
payment is outstanding, they will not,
and the case pauses while somebody
works out which figure is real. Five
minutes with the accountant beats a
week in a queue.
Is there a big year on year swing,
and why? Equipment purchase,
a bad debt wrien off, one client
leaving. Underwriters are generally
comfortable with variance, but not if
it is unexplained.
What is happening with the
director’s loan account? An overdrawn
balance is money owed back to the
company and credit teams will look at
it. Say up-front how it is being repaid,
or show it has been stable. It only
becomes an issue when it surfaces late.
Write the memo
The highest return thing I do on these
cases takes 20 minutes. A one-page
summary siing on top of the file.
It sets out where the income comes
from and how each element behaves,
so the assessor is not building that
picture from the tax returns. It
says what the accounts show about
working capital, because the unspoken
DAMIAN YOUELL
is senior mortgage broker and
director at Needing Advice
question behind every director case
is whether the drawings are starving
the business. It ties any large credit on
the bank statements to the dividend
voucher or invoice it came from, so
nobody has to wonder about a lump
sum landing in March.
A complex income case gives you
a full picture of how a client is paid,
in more detail than they have shown
anyone outside their accountant. It
is worth doing something with that,
because you are the only adviser
who has just read three years of
their accounts.
Two gaps show up constantly. The
first is sick pay. A director drawing a
small salary and the rest in dividends
has almost no safety net if illness stops
them working, and many executive
income protection plans can cover the
dividend element too, which surprises
people who assumed only salary
counted. The second is life cover.
Directors paying for personal policies
out of taxed income oen have no
idea the company can fund it instead,
and a relevant life policy tends to cost
the business less than the personal
equivalent costs them.
This is on us
Lenders have done a lot of the work
here. The products exist and the
underwriters are willing. But flexible
criteria only get used when the case in
front of the assessor is legible, and that
bit is our job, not theirs.
Engage the accountant early, fix the
contradictions before submission, and
put the story on the front of the file.
Do that and complex income stops
being complex. It is just income that
needed explaining. ●
