Bounce back loan towards deposit?

se2020

If I was looking to buy a house and took out the bounce back loan would that count towards affordability the same as any other outstanding credit commitments for mortgage purposes?

[Deleted User]

se2020 said:

If I was looking to buy a house and took out the bounce back loan would that count towards affordability the same as any other outstanding credit commitments for mortgage purposes?

 Strange title given your question. 

 So you're not planning on using a BBL as your deposit? 

se2020

Sorry, maybe not the right title.
As self-employed if j borrowed £50k from a bounce-back loan I could use that money to pay for business stock etc over the next few years and therefore put an extra 50k down towards my deposit.
Reading the loan terms it does just look like u could borrow it to pay myself anyway so I could just add it to my existing deposit anyway.
It's interest free for a year so that would save me a few quid in mortgage repayments over 12 months and if the mortgage rate is not less than 2.5% I could also save over the following 5years.

I just wonder if it would be counted as a credit commitment and reduce the amount they would be willing to lend? 
Even so, if the numbers add up it might be worth doing anyway?

Grumpy_chap

What is your turnover?

se2020

Enough to apply for the maximum of the bounce back loan if required although (again, not done the maths) it may be worth just borrowing enough to put me up into the next ltv bracket?

Grumpy_chap

Are you sole trader or Ltd Co?

se2020

The other concern is if the lender sees (I would not be trying to hide anything!) I had just taken out the bbl they would consider that as a part of my deposit anyway?
Ie. If I had £10k in the bank now and borrowed another £10k and then wanted to put £20k down?

In real life I would not want to use all my savings for the deposit. With the bbl I could use 100% of my existing money towards the house and then live/run the business from the loan. 

haras_n0sirrah

Dont do it.
Lenders may not lend to you if you have taken the bounce back loan. Seiss grant is one thing but the bounce back is saying your business has been so severely affected by covid that you need a loan to get you through. Coventry for example will not lend to anyone who has taken a bounce back 

[Deleted User]

Most lenders will be highly unlikely to lend to self employed who takes any support as it is an admission as you expect your business performance to suffer.   Unless you can show you will earn the same or more than on your last years tax returns then its not a great time to be self employed and looking for a mortgage

Natsplus

haras_n0sirrah said:

Dont do it.
Lenders may not lend to you if you have taken the bounce back loan. Seiss grant is one thing but the bounce back is saying your business has been so severely affected by covid that you need a loan to get you through. Coventry for example will not lend to anyone who has taken a bounce back 

Is it the same for limited companies or sole traders? If the loan has been taken under a ltd co then its not on your personal record as a loan?

haras_n0sirrah

Lenders are looking very carefully at all self employed whether Ltd or sole trader and are asking questions about what support has been taken for the business. They certainly wont allow a bounce back as a deposit.