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Self-employed: pay off business loan before mortgage?
Chris_Picto84
Posts: 1 Newbie
Hi forum,
maybe one of you is in a similar situation; my wife and I are both directors of a small Ltd company and are planning to buy a flat (probably via the shared ownership scheme) in about a year. We're saving for a deposit and have read about the obstacles for Ltd directors.
We have an equipment finance agreement/loan (HPA) where there is £40000 left over the next five years. It was a sensible investment in important machinery with low monthly repayments. We're in a position to make an extra payment of £20000, or, with a stretch, the whole £40000. This however would reduce our deposit that we could raise in one years time.
The twist is that we are personally liable for the loan as guarantors. I assume that this would play a role in a mortgage application. So to cut things short, should we:
- pay off the full loan, have a lower deposit, but have no strings attached as guarantors, or
- pay off as little as possible, have more cash for the deposit but higher potential liabilities?
Which way would make us more attractive to lenders?
Many thanks and stay safe everyone!
maybe one of you is in a similar situation; my wife and I are both directors of a small Ltd company and are planning to buy a flat (probably via the shared ownership scheme) in about a year. We're saving for a deposit and have read about the obstacles for Ltd directors.
We have an equipment finance agreement/loan (HPA) where there is £40000 left over the next five years. It was a sensible investment in important machinery with low monthly repayments. We're in a position to make an extra payment of £20000, or, with a stretch, the whole £40000. This however would reduce our deposit that we could raise in one years time.
The twist is that we are personally liable for the loan as guarantors. I assume that this would play a role in a mortgage application. So to cut things short, should we:
- pay off the full loan, have a lower deposit, but have no strings attached as guarantors, or
- pay off as little as possible, have more cash for the deposit but higher potential liabilities?
Which way would make us more attractive to lenders?
Many thanks and stay safe everyone!
0
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