Originally Posted by Stour
- i am assuming i would need to put around 30% upfront as a deposit
- I run a limited company. would there need to be some sort of personal guarantee on the mortgage as well as the guarantee on the building?
- is it made far more complicated by the fact that i'm an owner occupier AND a landlord in one building?
- can someone give me a rough rough idea of interest rate percentages on a fixed rate repayment commercial mortgage for 10 years? i just want to understand whether our year costs would go up, down or stay the same
- do people in my situation normally keep the building as part of the business they run from there or create a separate company who would receive rental payments and pay for repairs? does this have tax implications or just add lots of extra issues?
Answers as per your questions:
1. Yes - a lender will typically look for a contribution from you in the range of 25% to 40% depending on who you approach.
2. Personal guarantee - very likely. PGs are almost always mandatory today but if you have a very strong relationship with your bank you may be able to negotiate this away.
3. No - if anything it makes it more attractive to a lender ... you have a vested interest to keep the property well maintained and the loan repayments in order
4. Interest rate - you may want to think again about a fixed rate for 10 years - too long. For your calculations take a rate of 5% to 6% but also work it out for 8% to 9% to allow for future interest rate rises. It would be a mistake to calculate affordability solely on current rates.
5. You can own the property either way. Depends whether you want ownership tied up within your company (fate of the property tied in with your fortunes), or can treat it as an alternative investment with you benefiting from the rental income. Depending on your circumstance you could think about owning via a SSAS (pension scheme). It's best to speak to your advisor on the ownership options and tax implications.
Hope that helps.