bounce back loan and its impact on mortgage

challengesahead

I have a mortgage(along with my full time employed partner) offer in hand, and going through the purchase process right now.
Am also self-employed and thinking of getting a bounce back loan to support my business. I know there is no credit check or personal guarantee for LTD taking BBL. But what happens for a sole-trader? 
- Will the BBL impact my mortgage affordability?

Thanks

blue_max_3

It's just a loan like any other. Only 0% for the first year. You will list it like all your other debts (credit card etc). So your affordability will be lower. Obviously you could apply for the loan after you have secured your mortgage, if you can wait that long.

Thrugelmir

Debt is debt. Any debt will impact affordability.  With no doubt far more stringent underwriting criteria in the days ahead. 

challengesahead

blue_max_3 said:

It's just a loan like any other. Only 0% for the first year. You will list it like all your other debts (credit card etc). So your affordability will be lower. Obviously you could apply for the loan after you have secured your mortgage, if you can wait that long.

I have already got a mortgage offer. But have put exchange on hold as I might need to re-negotiate the purchase price( ~10% ). But I will have to ask the bank to send out another offer with updated figures. 
- When requesting a updated(lower) mortgage offer, do they do reassess again?

csgohan4

most likely and likely with stricter underwriting given the current risk appetite lenders now have with the current crisis. 
Gazundering is without it's risks, morality/ house price economics aside. 

You don't ask you don't get I guess, but be prepared to walk away if the vendor refuses, pulls the plug or the lender declines, so many factors to consider, 

goldie2506

blue_max_3 said:

It's just a loan like any other. Only 0% for the first year. You will list it like all your other debts (credit card etc). So your affordability will be lower. Obviously you could apply for the loan after you have secured your mortgage, if you can wait that long.

Or is it? Shoudlnt the bounce back loan be registered against the company - NOT the person? Mortgages when self employed incomes are taken into account are based on income drawn from the business. They dont take into account a hire purchase the buiness may have on a car, an oven, etc. 

challengesahead

So if a sole-trader applies for BBL it would be in business name( no ltd company here) ? and no debt would be recorded on the personal credit ref file.

dunstonh

Limited companies - no impact as not personally liable.  

Sole trader or partnership, impact on affordability as personally liable.

blue_max_3

goldie2506 said:

Or is it? Shoudlnt the bounce back loan be registered against the company - NOT the person? Mortgages when self employed incomes are taken into account are based on income drawn from the business. They dont take into account a hire purchase the buiness may have on a car, an oven, etc. 

I'm a director of my own company and if I want to get a mortgage, I need to show company accounts for three years. You may be able to rely on the previous years, but depends on your year end. Obviously all the expenses are deducted before your income is calculated. A loan would presumably be against the profit.
I'm sure they will be aware of this and have a check box to tick. I don't think you could just use it to put a deposit for a house down.

goldie2506

dunstonh said:

Limited companies - no impact as not personally liable.  

Sole trader or partnership, impact on affordability as personally liable.

I have tried to get clarity regarding this - very mixed messages. Starling bank couldnt even tell me! 

dunstonh

With limited companies, there would be the future business costs which would, in turn, reduce the profit a little.  Which in turn could reduce your drawings and your retained profit.   So, whilst no personal impact, as previously mentioned, it could have an indirect influence when you start repaying it.