How to finance new house?
Discussion
I have put a deposit down on a new build house that will require me to raise additional funds.
The situation is as follows:
Current mortgage is approx £140k left from original £240K. Repaying £1400 per month which represents an overpayment of £400 per month.
Extra funds required approx £70k to include stamp duty on purchase price of £582K.
The mortgage was taken out with Cheltenham & Gloucester but porting of mortgages is now dealt with by Lloyds Bank.
Will moving house and wanting to borrow back some of the original mortgage count as a remortgage and all the hassle this involves?
There are a couple of alternative funding options. I have just agreed on the sale of some land that my Ltd company owns. I am one of 3 shareholders so the only way to extract enough money from this sale would be as a bonus rather than dividend and therefore suffer the tax and N.I. this would trigger at 40% rates.
Alternatively I could lend myself the extra money as a director and pay what I believe the current rate official rate of interest of 3%. As this would not be secured on the property would I have to declare it to the original lender?
This would be done if the one off bonus can not be agreed with the other shareholders. Effectively I could increase my wifes remuneration from the company to cover the loan.
I have an endowment policy running (secured on nothing as removed it from mortgage at last house move 12 yrs ago) which is due in the next 5 years which would cover most of extra borrowing and my Sipp is available to draw from in 7 years.
Complicated I know but accountant on holiday and just looking for others thoughts
Thanks.
The situation is as follows:
Current mortgage is approx £140k left from original £240K. Repaying £1400 per month which represents an overpayment of £400 per month.
Extra funds required approx £70k to include stamp duty on purchase price of £582K.
The mortgage was taken out with Cheltenham & Gloucester but porting of mortgages is now dealt with by Lloyds Bank.
Will moving house and wanting to borrow back some of the original mortgage count as a remortgage and all the hassle this involves?
There are a couple of alternative funding options. I have just agreed on the sale of some land that my Ltd company owns. I am one of 3 shareholders so the only way to extract enough money from this sale would be as a bonus rather than dividend and therefore suffer the tax and N.I. this would trigger at 40% rates.
Alternatively I could lend myself the extra money as a director and pay what I believe the current rate official rate of interest of 3%. As this would not be secured on the property would I have to declare it to the original lender?
This would be done if the one off bonus can not be agreed with the other shareholders. Effectively I could increase my wifes remuneration from the company to cover the loan.
I have an endowment policy running (secured on nothing as removed it from mortgage at last house move 12 yrs ago) which is due in the next 5 years which would cover most of extra borrowing and my Sipp is available to draw from in 7 years.
Complicated I know but accountant on holiday and just looking for others thoughts
Thanks.
Current house is worth £540k. PAYE is sub 40k dividends make up the difference.
We have declared a dividend for the last 24 years.
Originally the mortgage on present house was £240k.
We have paid that down to £140k and we are currently overpaying by £400 per month.
I appreciate what you read into the question but affordability isn't the issue. More would it be a remortgage or would you take a loan from your company at over available interest rates?
Effectively you would be paying your own company the interest rather than the bank/building society
We have declared a dividend for the last 24 years.
Originally the mortgage on present house was £240k.
We have paid that down to £140k and we are currently overpaying by £400 per month.
I appreciate what you read into the question but affordability isn't the issue. More would it be a remortgage or would you take a loan from your company at over available interest rates?
Effectively you would be paying your own company the interest rather than the bank/building society
Oscarmac said:
Current house is worth £540k. PAYE is sub 40k dividends make up the difference.
We have declared a dividend for the last 24 years.
Originally the mortgage on present house was £240k.
We have paid that down to £140k and we are currently overpaying by £400 per month.
I appreciate what you read into the question but affordability isn't the issue. More would it be a remortgage or would you take a loan from your company at over available interest rates?
Effectively you would be paying your own company the interest rather than the bank/building society
Might be completely over-simplifying this but you can simply do a new (purchase) mortgage of 210k (remortgage terminology tends to relate to changing the mortgage on your current property) and - if you want to - port your existing deal.We have declared a dividend for the last 24 years.
Originally the mortgage on present house was £240k.
We have paid that down to £140k and we are currently overpaying by £400 per month.
I appreciate what you read into the question but affordability isn't the issue. More would it be a remortgage or would you take a loan from your company at over available interest rates?
Effectively you would be paying your own company the interest rather than the bank/building society
So you could port the 140k and borrow 70k extra on a current deal or have 210k all on the new rate if your existing mortgage isn't amazing. At your LTV the rates will be decent.
I don't know of the benefits of the company director loan/bonus routes but a "normal" mortgage shouldn't be any hassle whatsoever. To be honest if you go with one of the other options and just port the 140k the amount of work is the same. The loan amount will be different but the process is pretty much identical.
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