How do I get a mortgage after a 'bridging' loan?

sdrio

I'm not sure if it is a bridging loan, but here's the situation;

I sold my old place last September, which had a mortgage with Halifax. I found a new place, and arranged a new Mortgage, again with Halifax.

It was all completely normal, complete on both same day, all payments ready to go etc.

Just before we were due to exchange, the buyers for the old place pulled out.

As the market at the time was very short of properties, I decided not to pull out of the purchase. My company loaned the 10% deposit I needed.

The Halifax then said they wouldn't go ahead with the mortgage on the new place, they never explained why in clear terms, but I think it's because the 'loan' from my company would create some kind of charge over the new house.

Anyway, I arranged to borrow the complete amount from my company. I bought the new place and all went OK.

A couple of weeks later, I completed on the old place, paid off the Halifax mortgage, and the balance went to my company. There is now a balance I have to pay to my company of about £210,000.

So, now I own the new place, and have no mortgage. The value is about £500k, and I own my company £210k. I need to get a mortgage for that amount.

Halifax said at the time they could not look at loaning on it until I had been living there for 6 months. I called them today and he said he couldn't even start the process for 6 months, so I have to wait till the end of August to even start.

He said to call Santander, as they don't have such strict rules. I called them, and here's where I start getting concerned - the guy who I spoke to said they wouldn't give a mortgage 'to pay off another company'.

So, I'm a bit concerned that I have dug myself into a hole here. Am I going to find that nobody will give me a mortgage?

I have a tip top credit rating, earn more than enough to qualify for the amount I want to borrow, have virtually no debt, and am looking to borrow less than 50% of the properties value - so under normal circumstances wouldn't expect to have any problems getting a mortgage

Any ideas here? Should I stop worrying and wait till August to go back to the Halifax, or have I messed up?

Hope that makes sense. If not, please let me know.

Thanks.

ACG

Halifax told you to go to santander?
Seriously?!

Speak to a broker, there will be lenders but as you have found out its not one for every lender.

sdrio

ACG wrote: »

Halifax told you to go to santander?
Seriously?!

Speak to a broker, there will be lenders but as you have found out its not one for every lender.

Yes, I was slightly surprised.

Halifax at the time said they could do it, called it capital raising or something, I shall have to look around see exactly what that means.

But nothing was put in writing, I'm just concerned that if it took Santander roughly 3 seconds to say 'absolutely not', maybe Halifax won't be able to do it either.

I'll spend a bit of time reading here, I'm not sure where to start with brokers etc, have always had mortgages with Halifax.

Thanks.

Gonzo33

I don't think this is going to be an easy place to be honest I would also suggest speaking to a good broker.

james_09

Does your company have a charge on the property, or did you just take the money as an informal directors loan from your company?

You may already be aware of this, but if the loan to your company is not repaid within 9 months of your yearend you may have to pay advance corporation tax amounting to 25% of the loan.

You could also have a personal benefit subject to income tax if it has been provided interest free.

sdrio

james_09 wrote: »

Does your company have a charge on the property, or did you just take the money as an informal directors loan from your company?

You may already be aware of this, but if the loan to your company is not repaid within 9 months of your yearend you may have to pay advance corporation tax amounting to 25% of the loan.

You could also have a personal benefit subject to income tax if it has been provided interest free.

Hi. It's just an informal thing.

I know there are tax implications, I will be doing my self assessment form in the next few months, will sort it out then. Thanks for the heads up though.

I was thinking about it, seems to me if the loan from the company had been a proper mortgage, what I would effectively be doing is moving my mortgage from one lender to another. As far as I know, that's not unusual.

Wonder if I can retrospectively or otherwise formalise the loan from the company, so that it becomes a mortgage, then go to a normal lender and borrow in the same way as someone moving bank would?

[edit] I'm not thinking of doing it in any devious way, I would not try to hide anything from a lender, or 'backdate' documents.

james_09

I think it would be easier to get a mortgage as you are. You own a property outright with no mortgage or charge against it.

You also have no current obligation to make any repayments on your loan to the company.

I would have thought a financial adviser would be able to help you raise finance against your home personally to repay your loan to the company.

davidmcn

sdrio wrote: »

I was thinking about it, seems to me if the loan from the company had been a proper mortgage, what I would effectively be doing is moving my mortgage from one lender to another. As far as I know, that's not unusual.

Wonder if I can retrospectively or otherwise formalise the loan from the company, so that it becomes a mortgage, then go to a normal lender and borrow in the same way as someone moving bank would?

No, I think the main problem is that most lenders require you to have owned a property for at least six months before they will allow a remortgage (and the relevant date ought to be completion rather than them starting the application). I think some will make exceptions in situations like this where you've had to buy with bridging finance.

Thrugelmir

sdrio wrote: »

I know there are tax implications, I will be doing my self assessment form in the next few months, will sort it out then. Thanks for the heads up though.

The Company needs to file P11d's by the 6th July. The loan needs to be disclosed now.

sdrio

davidmcn wrote: »

No, I think the main problem is that most lenders require you to have owned a property for at least six months before they will allow a remortgage (and the relevant date ought to be completion rather than them starting the application). I think some will make exceptions in situations like this where you've had to buy with bridging finance.

Yes, that's what I understood. I was told Santander didn't apply the 6 month rule, but the guy that answered the phone just said no immediately, because of the circumstances.

I don't know if it's something to do with the job, but these guys always sound really defensive. Under normal circumstances I'm the least likely person to be turned down for a mortgage, but his tone was as though I'd asked him to take naked pictures of his grandma. :rotfl:

I'm sure I'll sort it out.

sdrio

james_09 wrote: »

I think it would be easier to get a mortgage as you are. You own a property outright with no mortgage or charge against it.

You also have no current obligation to make any repayments on your loan to the company.

I would have thought a financial adviser would be able to help you raise finance against your home personally to repay your loan to the company.

What you're saying is absolutely correct, but I'm wondering if the prospective lenders see it that way.

I'm slightly hazy on what constitutes a charge - I know you can create one if that is what is required, but not so sure about whether one can be created without the intention to do so.

I have no obligation to repay the money at the moment, but that doesn't mean I don't owe the money. Does a bank assume there is a charge anyway? Is one created in law simply by virtue of me having received the loan?

Should it even matter? If I owe X to my company, borrow X and pay them, any charge would be discharged anyway. It can;t be that different to paying off one mortgage then concurrently starting another, as is done in most house moves.

Having said that, it may be academic. If I can't get past the first line of defence - the 'NO!' guy I spoke to yesterday for example, then it doesn't make any difference.

Thanks for the input though.