Nawaz initially contacted me [Ben] from a referral by an existing client. He was in his early 30’s and a qualified Medical Doctor who had been working as a “locum” for a number of GP surgeries in the area.
He wanted to purchase his first home. This in itself would be a significant milestone however during our meeting I discovered that Nawaz was planning to begin a relationship and marry within the next 12/18 months and possibly start a family.
Another important factor was the potential that he may have to upsize again in the near future in order to allow for his parents to move into a new, larger family home to provide some additional support. Living at home had allowed him to save up a good deposit whilst enjoying a good standard of living. The majority of these savings had been retained in his Limited Company, mainly for tax efficiency.
This is a common structure in place for self-employed individuals, by initially allowing them to take a variable income in line with the profits of the business to ensure that tax liabilities are kept to a minimum. He had taken specialist advice from a good firm of accountants.
From Nawaz’ perspective, this was a crucial stage in life. My role was to provide Nawaz with guidance and support by understanding what was important to him, both emotionally and financially and structure a number of solutions with this in mind. Simplification was the key to this. Breaking down each area of support into bite-sized pieces, each with a detailed timeline would enable him to reach each milestone with minimal disruption to his busy working schedule.
First, we arranged a mortgage through a specialist lender who was prepared to take the applicants current earnings and also use income that had been retained in the Limited Company as this could theoretically be drawn out if required. It was important to consider a company that would also allow him to move house and take the mortgage to the new property free of penalty (portability), support overpayments and also allow him to offset any additional savings with the aim of paying the mortgage off early.
In addition, it was important to consider protecting both the impending new asset (new home) whilst ensuring that any future requirements were met. He was going to be getting married, possibly having children, upsizing in future to include increasing the mortgage and moving his parents into the family home. He was and would continue to be the main provider of income to the family, both now and going forward.
Aside from his NHS benefits, it was important to ensure that if should he die, any debts would be repaid and an adequate lump sum be provided for the ongoing care of the family. Family was a key consideration. So we arranged a ‘Relevant Life’ contract. This differs from personal life protection as it can be set up by the Limited Company for the benefit of an employee. The benefits will remain with the employee or his/her beneficiaries and the premium is a deductible business expense.
The cover was arranged tax efficiently through the company to provide a fixed level of protection to repay both the mortgage and to provide a lump sum that would cover the entirety of his working life or up to age 75.
To conclude, we have provided specific advice on two specialist areas that will ensure that both Nawaz and his family will have the peace of mind in that they have a mortgage that is flexible and can move with them and a policy that will fully protect the main provider long-term.