The lending barrier
A self-employed couple wants to refinance and release $120,000 for an investment purchase. The latest company profit is lower following equipment investment, and their existing bank cannot support the additional borrowing.
How we approached it
Review two years of financial information with the couple’s accountant. Identify any depreciation or other adjustments a lender will accept, without counting the same expense twice. Compare suitable lender assessments and consider a separate equity-release split and a standalone investment property loan.
The outcome
In this scenario, acceptable income adjustments could support refinancing, the $120,000 equity release and the investment purchase, subject to the combined borrowing assessment.
What this means for borrowers
A decline based on reported profit can justify a closer review of the accounts. Adjustments must be evidenced and lender-approved. Separating loan purposes can help record keeping; tax treatment depends on how borrowed funds are used.
Questions about this case
Does an equipment purchase automatically qualify as an income add-back?
No. Its accounting treatment and the lender’s policy matter. The accounts should be reviewed to identify supported adjustments and avoid counting an expense or depreciation twice.
This is an illustrative scenario comparable to deals we have handled for our clients. Figures and outcomes are examples; lending remains subject to individual assessment.