Will he get a mortgage ?

whiteswan

not for me but for a friend (honest - we were just discussing this in the place where everything is sorted out - down the pub !!:beer::beer:) - I said I don't see him having a problem but here goes........this is what I know...........

He is single 45 (no dependants) and owns his house outright (worth approx £100,000) - he has no bank/car loans etc - has credit card but he says he pays it all off every month.

He wants to move to a new property (value of new house £155000) - he has approx £55.000 deposit.

So wants to borrow £100,000 over 24 years - he says this is because a 25 yr would put him past working age ??

He is self employed director (just himself) - owns 100 percent of business - sole director - his earnings are PAYE (minimal ammount - think approx £7000 a year) plus dividends each year - according to him approx £22000 (per year) over last 3 years - had business for 10 years so last 3 years accounts are available.

He wants to rent out the property he currently lives in (rent should be approx £550 a month - minus tax etc)

I obviously told him to seek a whole of market broker - but said I would also ask on here for any opinions........

GMS

He could look to raise funds on the current property to reduce borrowings on the new purchase.

A Let to Buy scenario.

Some lenders will use the net profits of the limited company which may assist affordability.

Broker definitely useful on this one

whiteswan

Remembering previous answers on here would the lender only lend him 80 percent of the value of his current property ?

I assume he would have no problem raising the other £20000 shortfall on the £100,000 needed from his business - even on a low paye wage ?

But then that wouldn't give him good rates would it - with a buy to let scenario - is there a lender who would be more likely to lend on just his self employed income - leaving the current property out of it - ie more willing to accept salary and dividends ?

whiteswan

Oh something else we were discussing - is he a home mover or a first time buyer - with no property to sell ?

GMS

Many variables here. It's best to have a chat with a broker and see how it can be done.

Raising on the rental property may be tax efficient. He may prefer to keep it mortgage free.

whiteswan

GMS wrote: »

Many variables here. It's best to have a chat with a broker and see how it can be done.

Raising on the rental property may be tax efficient. He may prefer to keep it mortgage free.

Hi sorry for being thick.........

Do you mean if he borrows on his current property to raise the £100,00 he then becomes a cash buyer ?

Is this what you mean by mortgage free ?

GMS

He cant raise 100kas it is worth 100k.

I meant he may prefer to keep the current (to be let) property mortgage free and look to raise a mortgage for 100k for the new purchase.

As I say there are many variables which need full investigation