First Time buyer need big mortgage

Gloomy_Past_Bright_Future

g_attrill wrote: »

I would agree - given the business growth has been rapid, buy somewhere cheaper and see how things go for for a year or two and plough the extra into savings and then look again when you are certain that buying a much bigger/more expensive place is feasible.

edit: I missed your reply about wanting to put down roots, but perhaps one more step up to your main house would be sensible.

Also as house is small in comparison to land, we would rent the land and workshops to our company, it has own seperate entrance etc, therefore reducing profit in company and therefore reducing corporation tax liability.

So in effect our business would assist to pay our mortgage.

dwsjarcmcd

VIGILANT22 wrote: »

So do I....!!

However my concern here is what the rates would be on exiting the 5yr fixed....for sure it will be a payment shock...no way will you find a rate anywhere like a 1.2% mortgage in 5yrs...more like 5%...so your monthly payments will probably increase by another 1k

Whilst agreeing that a rate of 1.2% is indeed incredible, I do find this a strange comment. Would you rather the OP started at 5% (paying an extra £1k p.m) to avoid payment shock 5 years down the line! Don't think so

VIGILANT22

It's not strange at all..........It is a very important factor ...exiting a mortgage should be a consideration...as future affordability has to be considered....to base that on the current svr's would be somewhat misguided...and "payment shock" is something every responsible lender/advisor should make a client aware of..........

JA1000

1.2% + BoE? or 0.7% + BoE?

Still no realistic and needs to be in writing - no broker will match this.

Dan_1976

It should be considered and the OP should save or prep in anyway they see fit, but not pay more just in case.

OP. I get what your doing, the property will help you develope your business and becom eyour home. YOu will offset some of the cost which will help.

I would just be careful about securing the business and the property. Can you save any more to reduce the LTV. The bank are worried that the LTV does not give you a big buffer. HOuses of high value get hit hard when they drop.

Try and come up with an escape plan. Anyhow good luck.

Gloomy_Past_Bright_Future

Dan_1976 wrote: »

It should be considered and the OP should save or prep in anyway they see fit, but not pay more just in case.

OP. I get what your doing, the property will help you develope your business and becom eyour home. YOu will offset some of the cost which will help.

I would just be careful about securing the business and the property. Can you save any more to reduce the LTV. The bank are worried that the LTV does not give you a big buffer. HOuses of high value get hit hard when they drop.

Try and come up with an escape plan. Anyhow good luck.

Thank you.

We also have in our business current account at present just over 30k, with the corporation tax for year end 2009-10 set aside along with the years final quarter VAT, so in effect the 30k is actually shareholders funds (me and OH), which we could have access to and draw from the business, but we like to keep that in the business as we ensure that our suppliers are paid within 30 days (even though some of our customers think 60 is acceptable!), we also ensure that we always have enough money in the bank so that if none of our customers ever paid we would have enough to pay our suppliers. Being up to your eyes in debt learns you that one! As we always ensure that the cash in the bank pays the bills rather than the aged debtor report!

So I suppose our bank are also looking at that cash in the business account too.

Dan_1976

Yes, they see your business has assets or the ability to bail out a price crash and repo.

I would be conserned that your life is being owned by the bank. The bank will not think that your business is your life and your home is were your family lives. THey see it all as an asset and will strip it all if they have to.

You have cash etc which is great, it is not a good time to have overdrafts etc to manage cash flow.

At the end of the day, you go to do what you think is best. In your position I would probably go for. Just ensure you can overpay and do so until you have enough equity to ask the bank to unsecure the business.

I had a client do something like this when I was a broker, he was in a worse position than you sound, and it turned out ok for him.

Good luck

Conrad

OP - I personally would never get fully into bed with my business Bankers - I've seen such situations unravel too many times where out of the blue a new management team / new Bank directive leads to the Bank calling in a debt and forcing a home sale. In fact I read several harrowing accounts where people rued the day they got into bed with the Bank (too such an extent).

You know whats best for you though, so good luck with everything.

southantrim3

You don't actually need a double garage. As long as you had the space for it you could then build it after you move in and use some of the out buildings in the interim. I certainly wouldn't put the double garage as a neccesity in purchasing a house.

dimbo61

Dont know what type of mortgage you have applied for but with tha cash flow consider an Offset mortgage as a good place to keep TAX money, VAT money and emergency money GOOD LUCK