Equity release for a business purchase

Ed_The_Duck

I have a £60k mortgage on my property valued at £179k.
I want to release £60k to buy a shop. We have been renting the shop for 6 years at £5k per year so feel it would be better to pay ourselves the rent and pay for the 'investment property'
Can't find anyone who will give us a mortgage as the equity release money is for a 'commercial business'
Will struggle to get a business loan as the business only breaks even.
Can't understand why the lenders won't let me have a £120k mortgage when they will have the security of a £179k house plus a £60k shop.
Obviously we could sell the house to release the funds but we don't want to move
Any ideas where to turn next

Thrugelmir

Ed_The_Duck wrote: »

Can't understand why the lenders won't let me have a £120k mortgage when they will have the security of a £179k house plus a £60k shop.

Two totally different markets as far as lenders are concerned. As far as a borrower is concerned of course it's cheap financing. If the shop was profitable then it should be possible to obtain commercial finance for the shop , secured by way of a charge on your residential property. The point at issue is the risk to the lender. Debt recovery is extremely expensive and time consuming. Hence differing rates of interest depending on the type of lending involved. Plenty of vacant shops around.

lovinituk

Ed_The_Duck wrote: »

Will struggle to get a business loan as the business only breaks even.

Still breaking even after 6 years?! Is it really worth it?

Limited company or sole trader?

Ed_The_Duck

It's basically a hobby for my wife. It covers a small wage for her and pays all her car expenses. She enjoys it but it's never going to make us rich. However it could pay for the investment property.

It's a ltd company which makes a gross profit but nets a small loss

lovinituk

I don't think you will have much luck if the business is not profitable. We purchased a shop for our business last year. We took the commercial mortgage out as individuals but the company had to provide security in the form of a debenture. They needed to see strong accounts from the business and we had to put down a 25% deposit.

I doubt very much that any lender will give you residential lending for the purposes of buying a commercial property.

Ed_The_Duck

So would it be easier to get a remortgage for debt consolidation?
i.e. Get a loan for the time being and then remortgage in a years time to consolidate the loan and the mortgage

lovinituk

No idea, sorry.

Keezing

Ed_The_Duck wrote: »

So would it be easier to get a remortgage for debt consolidation?
i.e. Get a loan for the time being and then remortgage in a years time to consolidate the loan and the mortgage

Bear in mind that borrowing additional funds from your lender for debt consolidation purposes, or remortgaging to a different lender, will involve affordability checks.

60k worth of unsecured loans will be expensive and will significantly impact affordability calculations for your funds/remortgage application.

Make sure the sums add up, otherwise you could be stuck in a corner with expensive debt and no ability to consolidate.