Increase mortgage to buy business

[Tipptop]

Hello All,

I have a few questions which possibly some people may be able to steer me on the right path.

Situation at the moment is,

I have to opportunity to acquire a business, Total costs which I need is € 140,000. €40,000 for the purchase of the business and costs and €100,000 for the development of the premises, stock etc...

At the moment I have a couple of loans, Credit card, Car loan, and another business loan which all total about € 30,000 which I was hoping to get a credit union load and pay these loans off which would then make my monthly payments decrease from €1,300 per month to €650 per month.

At the moment my mortgage is €680 per month if I increase my mortgage by €140,000. My repayments are going to increase up to (Circa) €1,684 for a commercial mortgage over 20 years or if I got an ordinary mortgage (I don’t know if this would be eligible for a top up mortgage) my repayments would increase up to €1,540 over 20 years.

Either way there would be a shortfall of circa. between €250-€ 300 Extra which I would be hoping to recoup from the business.

I will be starting up a new company and was going to loan the company €100,000 of my mortgage loan and set up repayments of € 500 per month which should off set my increase repayments.

Possibly would I be better off of getting €170,000 and forgetting the about the credit union loan??

Any constructive information is most welcome.

 

[Sarah W]

Lenders will not lend against your home to fund a start up business so that could be a problem - are you going to continue in your current employment or work full time in the new business? if it's the latter then proving you will have sufficient income to service the mortgage and loan could also be an issue. Have you talked to your bank about a business development loan?

Sarah

www.rea.ie

 

[Tipptop]

Thanks for reading my post
It's not a startup business its where I work at the moment and its been established over 25 years its just that the owners are retiring soon and its either I take over or I'm out of a job.

 

[Sarah W]

Ah, that's different. If it's a going concern and you can show the accounts to your lender you may well be able to raise the funds as a mortgage at homeloan rates. If it's feasible to include the car loan, etc into the mortgage then that would be cheaper than a CU loan however you should look carefully at your total indebtedness and factor in 1 or 2% interest rate increase.

Sarah

www.rea.ie