House mortgage paid off, commercial property...

shaunhouse

Hi,

I have my house mortgage paid off. 30 years old and the house is worth about £200,000.

I wish to purchase a commercial property (shop) to form part of my pension. I already have a buy-to-let property (not doing anymore of these given the turbulance at the moment)

I could purchase this through a limited company which currently has 70k in funds. The property is £137,000.

My question is what do you think the best way would be to purchase the property?

Personally using funds from remortgaging the house
Through the limited company with a commercial loan
Some other way?

Thanks in advance.

glosoli

Generally releasing equity for the purposes of buying a commercial property (other than a buy to let) isn't permitted, as the view is that you should be subject to commercial loan rates, not rates applicable to a residential property. Don't know what others think but it may have to be through the company with a commercial loan.

gycraig_2

glosoli wrote: »

Generally releasing equity for the purposes of buying a commercial property (other than a buy to let) isn't permitted, as the view is that you should be subject to commercial loan rates, not rates applicable to a residential property. Don't know what others think but it may have to be through the company with a commercial loan.

Not an expert but the bank still have the value on the house as collateral so not sure why they would be overly concerned what sort of building is being bought with the money ?

shaunhouse

It would be my money to use so I don't see why this would be an issue. They cant put a stipulation on what I use the money for. That isn't what i was asking.

I was asking what people think the best vehicle would be to purchase commercial property. I know that commercial mortgages come with higher rates and fees. The property i am looking to buy comes with the potensial of an 18k return per year straight off the bat.

Thrugelmir

shaunhouse wrote: »

The property i am looking to buy comes with the potensial of an 18k return per year straight off the bat.

How long is the remaining lease? Is there a break clause in the lease? How financially sound is the tenant? Plenty of retail space empty.

shaunhouse

0 retail space empty around where I am. Been monitoring over the last 12 months and 2 properties came up for rent and went within a week.

Its 2 units one currently 6k per year and the other 12k per year. Both tennants have been there over 5 years but I would have no issue finding new ones if need be.

glosoli

shaunhouse wrote: »

It would be my money to use so I don't see why this would be an issue. They cant put a stipulation on what I use the money for. That isn't what i was asking.

It would be the bank's money that you are applying for, and every bank will have their own list of criterias as to what funds can, and can't, be used for, and typically raising funds for business purposes has barriers involved.

shaunhouse

Pretty common for business owners to remortgage there house in order to invest in a business. I am aware of several other business owners that have done the same thing. A broker has said to me absolutly no issue with doing this. I just wish to know if it the best route.

Obviously alot of money tied up doing it this way.