Help - Bank Said NO

johnb80

Hi,

I have a small business in my local town, we are a Ltd company and have been trading 18+ years. We are in the situation that a developer has taken over the lease of our property, our lease expired back in March and he's going to more than double our rent.

We started to look at other possibilities in town and we found a suitable building which was for sale for £120k. We spoke to our bank and all looked favourable, the mortgage would be £300 per month less than the rent were paying now.

The bad news is we were turned down because as a director of the company i went on a Debt Management Plan 6 years ago following massive expenditure (my mum had to go into a care home) and then being made redundant. I have never missed a mortgage or council tax payment and have stuck with the agreed DMP. My house is worth in excess of £320k with £40k mortgage to go and I have £20k cash available as a deposit. I am willing to put my house up as security.

Why does the bank to my personal DMP into consideration when a limited company was applying for the loan? Any advice on how to move forwards with this please? If we stay were we are the additional rent will probably push us under over time.

Many thanks in advance.

csgohan4

DMP is a mark of how you deal with your finances, it's part of your history, what ever the reason the DMP is for, it is of no concern to the lender, they only see you for what you are credit history wise.


Have you tried getting a commercial broker?

amnblog

You may have just dodged a bullet here.

On no account put your home up as security on such a purchase.

Personal guarantees are one thing but charges on your home another.

Your Bank is not the only lending option in town and they will possibly be other (and more expensive) options with other Lenders.

You may find renting safer.

johnb80

csgohan4 wrote: »

DMP is a mark of how you deal with your finances, it's part of your history, what ever the reason the DMP is for, it is of no concern to the lender, they only see you for what you are credit history wise.


Have you tried getting a commercial broker?

No the bank was the first port of call.

I know my DMP is part of my credit history but I always thought a Ltd company was a living thing in it's own right, if I became a director of the gas board I wouldn't expect my personal credit rating to be significant in the companies financing. The historical data that the banks has shows the company improving it's profitability year on year for the last 5 years, our outgoings would have been reduced further and we would actually be gaining an asset. The alternative is the exact opposite.

ACG

A limited company is its own entity. But as you will be giving a personal guarantee (presumably) and you are a person with significant control, you will need to be checked.

You could be really bad with money which could be a sign the company is run badly, you are reckless with money or any number of reasons.

I do not do commercial mortgages, but with a DMP in the background, your options are going to be limited (and more expensive) but due to the age of the DMP, I am sure there will be options, infact I know there will as I have just referred a client of mine over who is in a similar boat. He was quoted rates of 9.9% although he also had some other requirements, so you may be able to get slightly below that - but that is probably around what you should be budgeting for - but it might be worth speaking to a commercial mortgage broker.

westy22

As a Ltd company with a decent trading history you could try a business P2P lender such as Funding Circle (there are others); particularly as it would be an asset-backed loan. I think you generally get a decision from FC within a few days.