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Hi guys
My credit is poor, well, i dont know my rating, but virgin wouldnt give me a credit card, so im going with poor lol.
If i set up a LTD property company (which was my long term plan), how would i go about getting a mortgage on the LTD? Would it go in the companys name, but with no credit history on the company, would ANYONE lend to me?
Matt |
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Hi Mat,
As you the sole director they would certainly run a full credit assesment of you. Most lenders if not all will run full credit asesments on all directors.
Yours
Alex M |
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Isn't a limited company more expensive to set up? |
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£65 thats all, but to obtain a mortgage then it's a 20% deposit and possible personal guarantee.
Alex M |
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Please excuse my ignorance, but if personal guarantees are still needed, does this not oppose the concept of limited liability?
Regards, Malik |
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Malik,
A LTD company isn't quite what is seems (or sounds) - in fact, quite often you can get taken to the cleaners when it hits the fan, leaving you with just the shirt on your back !!!
FM |
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I’m sure you are right FM.
Nothing is for nothing: limited liability therefore is not as limited as one might assume… In the end someone has to pay to maintain the balance, and as you say “when it hits the fan…” they are going to look to the company “owners”…
I would have guessed that the only way to gain some sort of “limited liability was to structure the debts in a specific way: however I just learned that there is an order of priority when it comes to repaying… so the banks are first in line, followed closely by TAX man etc…
The main benefit, as I understand this “company issue”, is not limited liability but the TAX position: am I missing something?
Regards, Malik
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Right so your now LTD and need to borrow money to further advance the company, well most lenders will ask the directors to take a personal guarantee for most of it as to protect there interest so a second charge may be put on your home. This is common practise i have two Ltd companys and my property one the RBS have insisted on personal guarantees. Regards Ltd BTL's if you want 85% then you will have to take a personal guarantee at 80% no guarantee.
Lenders are very wary os LTD comps
Alex M |
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Zulfiquar, you are right about there being an order of priority, but the powers that the creditor has to take action against the debtor causes something to be a priority debt. See the examples below:-
Debt Final sanctions
Mortgage arrears Repossession/eviction
2nd Mort/secured loan arrears Repossession/eviction
Rent arrears Bailiff/eviction
Council Tax arears Bailiff/imprisonment
Phone & water rate arrears Disconnection
Gas & Elec Disconnection
Unpaid fines Bailiff/imprisonment
Maintenence arrears Bailiff/imprisonment
Income tax arrears Bailiff/imprisonment
VAT arrears Bailiff
HP Repossession
Banks, credit card & finance companies are seconardy debts & although secondary debts can lead you to being summoned to the county court, leading to a poor credit record for having county court judgement against your name, they are not are not considered a priority in that imprisoned for a bank/finance debt. |
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The info I posted above doesn't make a lot of sense now its been posted. It was set out as a list with debts on the left & the final sanctions on the right. Now its jumbled up together the message has been obscured. If I'd known how it would appear on the page, I would have used punctuation so you could see where one category ends & another begins.
Hey ho |
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Zulfiquar, you are right about there being an order of priority, but the powers that the creditor has to take action against the debtor causes something to be a priority debt. See the examples below:-
Debt ----------Final sanctions
Mortgage arrears - repossession/eviction;
2nd Mort/secured loan arrears - repossession/eviction;
Rent arrears - bailiff/eviction;
Council Tax arears - bailiff/imprisonment;
Phone & water rate arrears - disconnection;
Gas & Elec - disconnection;
Unpaid fines - bailiff/imprisonment
Maintenence arrears - bailiff/imprisonment;
Income tax arrears - bailiff/imprisonment;
VAT arrears - bailiff;
HP - repossession;
Banks, credit card & finance companies are seconardy debts & although secondary debts can lead you to being summoned to the county court, leading to a poor credit record for having county court judgement against your name, they are not are not considered a priority in that imprisoned for a bank/finance debt. |
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Janet,
Thanks for taking the time to re-explain! I think I understand it better. I woudl guess that trying to keep the "wolf" from the door in the first place has to be the over-riding part of the action plan of any property investor.
Regards, Malik |
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janet,
thanks for that very helpful.
ill copy and paste that into my investment file!
tom |
