Advice needed on remortgaging for money to start business

Serendipity76

Hello,

I bought my flat four years ago and have a 5 year fixed rate repayment mortgage with Alliance & Leicester for about 4.9%.

I was made redundant recently (like thousands of others!) and have decided to start my own business, as this is something I've been thinking about for a while and I need a change of direction. However I haven't got much - make that any! - money and I need to find around £2/3k in order to get the business off the ground.

I had the flat valued at £290k in May of this year. I have £110k left on the mortgage, the fixed rate of which ends in July 2010. So I think that means I have £180k equity in the flat.

I'd be very grateful if someone could let me know if it is possible for me to remortgage and take some equity out of the flat whilst I am 1) unemployed and receiving Job Seekers Allowance, and 2) whilst I still have just under one year left on the 5 year fixed rate.

I think there is an early redemption penalty of around £4k but does that apply if I stay with Alliance & Leicester or is that just if I leave A&L before 5 years are up?

Any advice would be gratefully received. I have looked into getting a new business loan and the interest rate is very very high.

Thank you!!

Anna

mpg

If you only need 2-3k have you been to business link or looked at grants Etc.
Increasing you monthly outgoings when on JSA. would scare me a little

What are you looking at doing

Serendipity76

I haven't been to business link yet - will do that this week, thanks. I had a quick look into grants and didn't find anything that sounded likely.

I should have mentioned I do have some income as I'm doing freelance PR work, this has been declared and is under the amount that stops you receiving JSA.

I'm looking to set up a press office service for small businesses.

I would prefer to increase my mortgage repayments than take a business loan from the bank which has an interest rate of 20%.

Thanks

opinions4u

There's no chance of your lender, or any other high street lender, adding to your mortgage based on your current income or the potential income of a new business start up.

That's the cold hard facts of it.

If you're maintaining the payments you could ask about a payment holiday.

I would personally see if you can get any members of your family to back you.

Mrs_Bumble

As opinions4u states you can't raise money on the mortgage as you would have to have enough income to support the whole mortgage and you don't have that.

Contact your local Business Link office and check out the grants and fundings there are start up grants etc for new business and you might find that you fall into the right category.

butterfriends

serendipity - why do you need £2-3k to set up that business? i have a similar business and really the start up costs were fifty quid to buy a domain name and set up a decent looking email address. if you're thinking you need to invest in pr planner or something - you really don't, especially when you're just starting out
good luck with it though

Serendipity76

Thanks all - your responses are very helpful. I'll get in touch with Business Link and have another look at the costs, and work out what is really essential and what isn't.

Cheers and thanks again - much appreciated.