High house prices damage buiness and the economy

Graham_Devon

Conrad wrote: »

Some people have used equity as a much cheaper, easier and best of all, safer, way to expand or start a business.

But as it's fraud, that leaves others trying to start a business at a direct disadvantage.

Indeed, it leaves those without a house (and trying to start a business in order to later buy one) at a disadvantage, as their competitor has used fraudulent practices as a leg up.

I'm not entirely sure this is panning out to be a good reason for higher house prices?

Graham_Devon

Conrad wrote: »

Like I said, Anita Roddick started Bodyshop with a 'car' loan, it's what happens in reality.

No no no no no.

See you are trying to back up fraud by using another "fraud" to say it's ok.

Did anita take out a car loan fraudulently? I.e. was the loan attached to the car under HPI. OR, was the loan a personal loan taken with the intention to buy a car given as the reason?

Very different scenarios. A personal loan CAN be used for anything, regardless of the intentions you state on application.

A HPI car loan is attached to the car itself.

Edit: I've just checked myself, and this Anita Roddick website itself says nothing about a car loan, but states her business was started when her husband Gordon, took a loan out in his name and gave the money to her. All Anita Roddick stated was that it's easier to take out a loan for a car than for a business.

Didn't think the car loan thing stacked up as I was wondering how on earth you could buy a car on a HPI loan and walk out with cash (other than selling the car on to someone else with the loan still attch to it, which is a criminal offence)

You do get confused when you start using your fraudulent scenarios conrad.

http://www.anitaroddick.com/readmore.php?sid=154

The banks were useless at the start,' she says, 'and still are. It's easier for a woman to raise money for her new kitchen cabinet, or even a car, than for a business enterprise.' So her husband, Gordon, borrowed the money - and gave it to her.

the_flying_pig

Conrad wrote: »

Some people have used equity as a much cheaper, easier and best of all, safer, way to expand or start a business.

Offset mortgages are the meat and bread of many a business owner. For example repaying capital when you can but perhaps then withdrawing some at super low rates to lets say fund some capital equipment.

The danger in a business loan is that PERSONAL GURANTEES and other warranties can effectively render you impotent and put the bank in control of everything which can be incredibly stressful and chaotic where far away decisions made often by idiotic clueless bankers can cause chronic fatigue and worse.

another thing - the peak age for enterpeneurship is, well, it's young, really young, depressingly younger than most or all posters on this forum. in a few industries [most obviously IT] it's exceptionally young.

as we've discussed on here a zillion times, HPI puts a few quid in the back pockets of some households [primarily older ones] but it doesn't magic this money out of nowhere, it's only greater borrowing/debt by other households [primarily younger ones] that makes it possible.

IMO anythign that transfers wealth from young to old seems more likely to be bad than good for enterpeneurship all-round.

grizzly1911

Conrad wrote: »

The danger in a business loan is that PERSONAL GURANTEES and other warranties can effectively render you impotent and put the bank in control of everything which can be incredibly stressful and chaotic where far away decisions made often by idiotic clueless bankers can cause chronic fatigue and worse.

I don't dispute the argument that borrowing re mortgaging to release equity for business use goes on. I also agree that is often cheaper to do so.

Is it not often the case that a bank will not provide the finance without security. Punters decide that if they have got to use their house (often the only sizeable usable security) they might as well remortgage because it may be cheaper. It also makes it long term debt rather than short term.

It may be the only way of raising money for a venture the Bank thinks too risky.

If your business isn't viable how does it reduce the risk apart form having two lenders on your back.

Yes you may get slightly longer before default alarms ring in the mortgagees head but all your debt is in one basket. The loss of the home is no less likely.

Directors and sole traders/partnerships are usually one in the same at start up and for any debt banks will typically insist on guarantees to tie in personal liability.