How Can Your Home Help You Raise Money For Your Business?
Whether you are setting up a new business or have one that has been trading for many years it may require some form of financial support. Perhaps, this is to assist in the purchase of new premises or to help fund the purchase of an expensive piece of equipment that you wish to invest in to be able to take on new profitable business.
There are a number of ways in which this can be funded such as by arranging a business loan or commercial mortgage with your bank or other specialist lender or, in the case of buying machinery, taking on a hire purchase arrangement.
However, one of the many other ways to raise funds is by using the equity in your home. Obviously, the figures will need to all add up. What we mean by that is that the value of your home will need to be sufficient to provide the funds required taking into the account the amount of the mortgage that may already exist that you took on when buying your home and the lender will still require sufficient security margin in the property value so that its risk is kept to a minimum.
For instance, if your home is worth say £250,000 and you have a mortgage with the building society for say £150,000 then you would not be able to raise £100,000 to inject into your business as this would use up all the equity. After all, if house prices fell, the lender who provided the additional funds to inject into your business could end up loosing money if the business failed and you defaulted on the borrowing.
You could raise money for your business using your home in one of two ways. You could arrange a business loan and the lender could arrange to take a second mortgage over your home. Another way is that you could approach the building society or bank that lent you the money to buy your home and ask them if they would allow you to arrange the likes of a further advance directly from them. Not all residential lenders provide finance for business purposes but some may do.
Obviously, this is a complex area of business finance so you may wish to get some advice in this respect. So, why not get in touch with us here at Commercial Mortgage Link and we will put you in touch with a reputable business loans broker who will be able to discuss your requirements and provide some form of guidance. We look forward to hearing from you.