Remortgage to buy business

[chrispmartha]

Quick question, i have around £180k equity in my house and I need £50k to buy out shareholders in my business to take 100% control, is it possible to remortgage for this purpose, as in does the bank need to know what the money is for?

[Sarnie]

chrispmartha said:

Quick question, i have around £180k equity in my house and I need £50k to buy out shareholders in my business to take 100% control, is it possible to remortgage for this purpose, as in does the bank need to know what the money is for?

Will they want to know what the money is for? Yes.

Lending for business purposes would be declined by most lenders, although a few will do it, circumstances dependent........

[chrispmartha]

Sarnie said:

chrispmartha said:

Quick question, i have around £180k equity in my house and I need £50k to buy out shareholders in my business to take 100% control, is it possible to remortgage for this purpose, as in does the bank need to know what the money is for?

Will they want to know what the money is for? Yes.

Lending for business purposes would be declined by most lenders, although a few will do it, circumstances dependent........

Cheers

Im going to look into a small business loan instead, i’m sure that will be wuite tricky also?

[hyphen]

Sarnie said:

Will they want to know what the money is for? Yes.

Lending for business purposes would be declined by most lenders, although a few will do it, circumstances dependent........

Surprising, why is that?

Seeing as they have secured asset then no loss to them if business goes under. win-win.

[mcbook]

What if instead of using the money to buy the shares, you used it for home improvements? So long as you meet affordability and LTV criteria it should be fine, right?

But you'd really need to use the cash for home improvements and it wouldn't be at all right to wallpaper the living room and use the remainder to buy the shares. That would be wrong.

[Sarnie]

hyphen said:

Surprising, why is that?

Seeing as they have secured asset then no loss to them if business goes under. win-win.

Because mortgage lenders are not in the business to repossess properties............thats a long, drawn out, expensive process.......and then tey have to dispose of the property.

Certainly not win-win.

[Trophy Husband]

chrispmartha said:

Sarnie said:

chrispmartha said:

Quick question, i have around £180k equity in my house and I need £50k to buy out shareholders in my business to take 100% control, is it possible to remortgage for this purpose, as in does the bank need to know what the money is for?

Will they want to know what the money is for? Yes.

Lending for business purposes would be declined by most lenders, although a few will do it, circumstances dependent........

Cheers

Im going to look into a small business loan instead, i’m sure that will be wuite tricky also?

How will you secure the small business loan? Would you be able to do this via the business with the approval of the shareholders you wish to buy out? What would they be signing as current shareholders? Personal guarantees? I think you are in a cleft stick with this? You need professional advice from a lawyer I would suggest?

[williaa68]

You can probably find someone who will do what is known as a second charge loan - rate will be higher than a morgage rate but probably cheaper than commerical loan unless the businesses cashflows and track record are good enough to support