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  • FIRST POST
    • Roysee
    • By Roysee 9th Aug 18, 3:24 PM
    • 12Posts
    • 0Thanks
    Roysee
    Loan to daughter's compny
    • #1
    • 9th Aug 18, 3:24 PM
    Loan to daughter's compny 9th Aug 18 at 3:24 PM
    Hi there

    My daughter and son in law have recently set up a buy to let limited company. The company has had an offer on a property accepted. I propose to provide her with a loan for a large part of the deposit. She has been advised that providing such a loan to the company would be looked at unfavourably by a mortgage provider. Can anybody throw some light on this and if this is so what other way of providing the money would not cause any issues. I would prepare a formal loan agreement stating the terms of the loan and interest rate.
Page 1
    • Pixie5740
    • By Pixie5740 9th Aug 18, 3:37 PM
    • 12,684 Posts
    • 18,093 Thanks
    Pixie5740
    • #2
    • 9th Aug 18, 3:37 PM
    • #2
    • 9th Aug 18, 3:37 PM
    Hi there

    My daughter and son in law have recently set up a buy to let limited company. The company has had an offer on a property accepted. I propose to provide her with a loan for a large part of the deposit. She has been advised that providing such a loan to the company would be looked at unfavourably by a mortgage provider. Can anybody throw some light on this and if this is so what other way of providing the money would not cause any issues. I would prepare a formal loan agreement stating the terms of the loan and interest rate.
    Originally posted by Roysee
    Who advised your daughter this? A mortgage broker?

    Do your daughter and son in law have any skin in the game or are they proposing to borrow 100% of the purchase price?
    • forgotmyname
    • By forgotmyname 9th Aug 18, 3:55 PM
    • 27,440 Posts
    • 11,079 Thanks
    forgotmyname
    • #3
    • 9th Aug 18, 3:55 PM
    • #3
    • 9th Aug 18, 3:55 PM
    Can they afford to pay your loan and the mortgage if they have no tennant in the property?
    Punctuation, Spelling and Grammar will be used sparingly. Due to rising costs of inflation.

    My contribution to MSE. Other contributions will only be used if they cost me nothing.

    Due to me being a tight git.
    • foxy-stoat
    • By foxy-stoat 9th Aug 18, 4:00 PM
    • 2,440 Posts
    • 1,352 Thanks
    foxy-stoat
    • #4
    • 9th Aug 18, 4:00 PM
    • #4
    • 9th Aug 18, 4:00 PM
    Just gift the money to them - at least you all know where you stand at the start. If they decide to pay you back then happy days.
    • Tarambor
    • By Tarambor 9th Aug 18, 4:04 PM
    • 3,385 Posts
    • 2,478 Thanks
    Tarambor
    • #5
    • 9th Aug 18, 4:04 PM
    • #5
    • 9th Aug 18, 4:04 PM
    Unless you can afford to lose the money don't get involved. It is a business and if they'd have done any kind of business plan they'd have known they'd need money to get going and sorted out funding. It isn't your daughter who needs the money it is the Ltd Company which is a separate legal entity. Sounds like they don't know their arris from their elbow when it comes to having a business if they haven't already got the funding in place for something they knew they'd have to have so you want to be well out of it.
    • foxy-stoat
    • By foxy-stoat 9th Aug 18, 4:09 PM
    • 2,440 Posts
    • 1,352 Thanks
    foxy-stoat
    • #6
    • 9th Aug 18, 4:09 PM
    • #6
    • 9th Aug 18, 4:09 PM
    Business plan you say? I doubt one was done as normal yield on BTL is mid single figures. Hardly a corker of a money making business.
    • Tarambor
    • By Tarambor 9th Aug 18, 4:25 PM
    • 3,385 Posts
    • 2,478 Thanks
    Tarambor
    • #7
    • 9th Aug 18, 4:25 PM
    • #7
    • 9th Aug 18, 4:25 PM
    Business plan you say? I doubt one was done as normal yield on BTL is mid single figures. Hardly a corker of a money making business.
    Originally posted by foxy-stoat
    Indeed. I sold out when it got to the point you could beat the returns with regular saver accounts without having any of the grief. Money is now sat in a S&S ISA which has returned way more than the yield. Property around here has been basically flat for price gains since the crash so no making money via that route like you could do in London.

    BBC News recently had an article about how many landlords are getting out of the rental market. I suspect the OP's daughter has read something in the news recently about rents rocketing and thought it was a good idea for some easy money. If they think renting out property is easy money they're in for one hell of a wake up call. To sell the house after my last tenant moved out, or even to be able to rent it again, it cost me 10k to refurbish it with much of that being due to what they'd done to the place.
    Last edited by Tarambor; 09-08-2018 at 4:27 PM.
    • BrassicWoman
    • By BrassicWoman 9th Aug 18, 5:23 PM
    • 1,702 Posts
    • 6,989 Thanks
    BrassicWoman
    • #8
    • 9th Aug 18, 5:23 PM
    • #8
    • 9th Aug 18, 5:23 PM
    buy a share of the company. let them buy you out when they have the cash.
    Jan 18 grocery challenge 105.13/ 150
    • buythedip
    • By buythedip 9th Aug 18, 7:21 PM
    • 15 Posts
    • 21 Thanks
    buythedip
    • #9
    • 9th Aug 18, 7:21 PM
    • #9
    • 9th Aug 18, 7:21 PM
    What proportion and how much of the deposit?

    How much capital are they putting in in total? Have they already got properties or is this their first? If so, I!!!8217;m going to become a premier league footballer tomorrow
    • Willing2Learn
    • By Willing2Learn 9th Aug 18, 7:23 PM
    • 799 Posts
    • 619 Thanks
    Willing2Learn
    buy a share of the company. let them buy you out when they have the cash.
    Originally posted by BrassicWoman
    This is my favourite idea so far...It's like something out of Dragon's Den lol ...But a seriously good idea though...
    Last edited by Willing2Learn; 09-08-2018 at 7:27 PM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • DCFC79
    • By DCFC79 9th Aug 18, 8:07 PM
    • 32,313 Posts
    • 20,324 Thanks
    DCFC79
    Are you sure you want to mix finance and family ?
    It rarely ends well when it goes belly up.

    Id avoid it if it were me.
    • venison
    • By venison 9th Aug 18, 8:08 PM
    • 2,287 Posts
    • 2,471 Thanks
    venison
    Keep clear if you value them, the lender would walk away knowing that the deposit was also a loan.
    Former Board Guide
    • Roysee
    • By Roysee 10th Aug 18, 10:22 AM
    • 12 Posts
    • 0 Thanks
    Roysee
    Many thanks for all your helpful comments. This has given me plenty to think about. Cheers
    • dealer wins
    • By dealer wins 10th Aug 18, 10:43 AM
    • 5,907 Posts
    • 11,309 Thanks
    dealer wins
    If you want to help do it as a gift. Because in all likelihood thats what it will end up being however you decide to do it.
    Choose life
    • Ilona
    • By Ilona 10th Aug 18, 11:03 AM
    • 2,121 Posts
    • 7,284 Thanks
    Ilona
    There is a lot more to this story if you read back through the OP's previous threads.

    Quote....My daughter runs a btl business making profits. I maintain her accounts and file her tax return.
    Unqote

    Posted in March.
    Quote.....I have two btl properties and last year made a profit for the first time and after deducting previous years losses I was still in profit and paid tax on those profits.
    Unquote.

    It does help to get the whole story.

    ilona
    My home is full of second hand furniture that other people have thrown out. I wear other people's clothes bought from car boot sales and charity shops. I eat out of date (yellow sticker) food. And I will jump in a skip if there is anything in there that I can rescue. I love my brilliant life on a pension.
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