Can I get mortgage if my ltd company applied Bounce Back Loan?

917700

I am a company director for 2 companies. Sole director and 100% shareholder for company A, sole director and 80% shareholder for company B.

Both two companies applied Bounce Back Loan in May. I re structure the company and our profit is higher than previous years.

Do I still have a chance to get mortgage? 

Do I need to settle the Bounce Back Loan first?

thanks

csgohan4

needing a bounce back loan may reflect negatively on the company. I would suggest getting a good broker as you are not straight forward

ACG

You can but there are caveats with that.
You can not use the loan to fund the deposit. 
If your business needed the loan in order to stay afloat then probably not. If you have it then as a bit of an insurance policy should business go quiet, then possibly. 

917700

ACG said:

You can but there are caveats with that.
You can not use the loan to fund the deposit. 
If your business needed the loan in order to stay afloat then probably not. If you have it then as a bit of an insurance policy should business go quiet, then possibly. 

Hi ACG

Thanks for your post. I spoke with two brokers before, neither of them can give me a firm answer.

The Bounce Back Loan is never used after I receive it. My business bank account balance is always well above the Loan amount.

I am wondering is that necessary to settle the Bounce Back Loan before my mortgage application. 

Usually, I only take part of profit out as dividends and salary for the tax efficiency purpose. The remain part of profit will be more than the amount of the Bounce Back Loan. 

Sibbers123

One of the conditions for applying for the BBL is that your business has been adversely affected by Coronavirus. The bank will take this at face value, making it harder to get a mortgage. 

That said, it is your limited company(ies) that has borrowed the money, not you. Therefore, it will depend on what questions the lender asks as to whether you need to disclose this. If you have to disclose it, then you will struggle. You need a broker to help you IMO.

if the loans are repaid, then it will be much easier and you will have more lenders to choose from I suspect.

ACG

Sibbers123 said:

One of the conditions for applying for the BBL is that your business has been adversely affected by Coronavirus. The bank will take this at face value, making it harder to get a mortgage. 

That said, it is your limited company(ies) that has borrowed the money, not you. Therefore, it will depend on what questions the lender asks as to whether you need to disclose this. If you have to disclose it, then you will struggle. You need a broker to help you IMO.

if the loans are repaid, then it will be much easier and you will have more lenders to choose from I suspect.

Whilst this is true and this is why some lenders do struggle, there is no definition of adversely affected. 
If you had to close in April and then business volumes went back to normal in May, you have still likely been adversely affected, even if things have gone back to normal. 

ACG

917700 said:

ACG said:

You can but there are caveats with that.
You can not use the loan to fund the deposit. 
If your business needed the loan in order to stay afloat then probably not. If you have it then as a bit of an insurance policy should business go quiet, then possibly. 

Hi ACG

Thanks for your post. I spoke with two brokers before, neither of them can give me a firm answer.

The Bounce Back Loan is never used after I receive it. My business bank account balance is always well above the Loan amount.

I am wondering is that necessary to settle the Bounce Back Loan before my mortgage application. 

Usually, I only take part of profit out as dividends and salary for the tax efficiency purpose. The remain part of profit will be more than the amount of the Bounce Back Loan. 

Personally, I can not see you needing to settle the BBL from what you have said. It is very much down to the individual merits of the case though. 

Thrugelmir

Why borrow through the companies if you have no need of the funds? 

917700

Thrugelmir said:

Why borrow through the companies if you have no need of the funds? 

This is a very good question. 

When the Lockdown was announced, I did feel a lot of pain. Therefore, I applied the BBL in case we need it. 

After that, I reacted quickly and restructured the sales channels. I closed unprofitable branch and move all sales to online sale. 

Because I usually keep some fund in my company for cash flow purposes. If I don’t need to settle the BBL before my mortgage application. I can release more of my own funds towards the deposit.

The terms of BBL are 6 years, it didn’t clearly say when we need to settle the BBL before the end of the term.