Remortgage - please help

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Remortgage - please help

    Hi Guys,

    I would like to ask about rather strange experience.

    Me with wife own a property outright and we would like to remortgage it to release money out. We have passed every lending criteria as we are both on good incomes.

    We would like to use the money to purchase another property, outright. We would then like to rent out this flat. We have established a ltd where me and wife are directors and the only shareholders. We would then like to loan the money from remortgage to the company so that the company can purchase this flat. All this is so that we can avoid paying higher taxes.

    The lender has however in last minute told us that we cannot do this and it sounds very strange to me. The remortgage would be secured against our property, we have sufficient income, so what does the bank care about how we optimise out taxes?

    Could you please share your experience, or which lenders are less stringent about this?

    #2
    I think your intentions do not seem to be genuine or convincing . Normally there is no restriction how you use the money raised from re-mortgage of your own property.

    First point is that you say you want to re-mortgage to buy another property and rent it out. Then in next sentence , you say you want to lend the money to your company so that your company can purchase the flat.

    When you apply to another lender, don't mention re-lending your money to your company.

    Comment


      #3
      Further to Gordon99’s posting, I cannot see any issues for what you are proposing, the monies are to be used for the purchase , there is absolutely no need to complicate the issue by declaring that the monies will be loaned to the company to fund the acquisition , the fact that once the monies are received in your personal bank account and then transferred is a transparent transaction and satisfies the solicitor regarding the origins of the purchase monies, indeed you could provide a copy of the Completion Statement to corroborate all declared facts.
      Unfortunately given that the lender has now decided not to fund the transaction means that unless you make a written appeal setting out the full facts you might have to start over again , the slight negative is that you would need to declare on the new application that you have been declined.

      Comment


        #4
        Thank you for your replies guys. I thought exactly the same... Here is part of the answer from the rep.

        "When we complete our applications we have to confirm and authorise the exact purpose of any borrowing, and "Lender" do not authorise any type of mortgage lending for business purposes, whatever those purposes are, which your application would be as property will be bought in business name."

        Comment


          #5
          Well that’s fair enough if that’s their terms and conditions.

          I had had a similar experience in that I wanted to remortgage (capital raise) from my own property to purchase another property outright so I could rent that new property out. I was honest with the first bank I spoke to and told them what my intentions were and they declined me by saying they can’t remortgage this property knowing that the money will be used to purchase a property with the intentions of it being rented out.

          I learnt my my lesson and the next application I simply said I wanted to use the funds for home improvements, a new car etc etc etc.

          Ultimately I didn’t need to do it in the end (bank of Mum and Dad) but that’s what I would’ve done, albeit slight dishonest.

          Comment


            #6
            Sorry Redhitman , I know that you are not alone in making a false declaration on the application ,indeed many people in the 70's to the 90's were driving around in their newly refurbished kitchens but one cannot condone such matters , it is just wrong and unnecessary.

            There are many good lenders in the market who will provide funding by remortgage and not raise an issue, indeed only just before Christmas I raised a large remortgage for a client secured on a semi commercial unit with the declared purpose to fund the purchase of a Buy to Let , the lender confirmed that they had no interest in how the monies were to be used and the rates were prime.

            Comment


              #7
              Originally posted by loanarranger View Post
              Sorry Redhitman , I know that you are not alone in making a false declaration on the application ,indeed many people in the 70's to the 90's were driving around in their newly refurbished kitchens but one cannot condone such matters , it is just wrong and unnecessary.
              I agree 100%. Wasn't trying to brag. I certainly don't condone it.
              I was very uncomfortable doing it and truth be told I probably wouldn't have gone through with it.
              It was because of the dishonesty I was thinking about doing in fact that made my parent's step in and help.

              I know lots of people who have done it. I had one friend ring Santader for a 20k loan and when asked what it was for, he said "a deposit on a house" (which indeed it was). The refused him instantly. He hung up, rang back (spoke to a different adviser) and this time said it was for a car.
              He got it and used it on his house (with his then fiance) as their deposit.

              Ironically that was the house I then bought and needed my own loan for! But that's a different story....

              Comment


                #8
                You cite one lender who has more inconsistencies than my wife’s Yorkshire Puddings.

                Comment


                  #9
                  Hi

                  Basic tax question (for some, but not me :-) ) related to this.

                  If I remortgage one of my buy-to-let properties and take out more money than the initial cost of the property, then invest in another property then I believe I don't get taxed on the remortgage amount because its wholly re-invested into property.

                  If I was to use the money to fund the purchase of a car then I believe I can be taxed.

                  So my question is, if you remortgage a property that you hold in your own name and then lend the money to your limited company to purchase a property or pay down a current loan on a property held in the company, would the remortgaged amount be liable for tax?

                  Thanks and hope I somehow wasn't too confusing.

                  Brendan

                  Comment


                    #10
                    Originally posted by Oakleigh View Post
                    Hi

                    Basic tax question (for some, but not me :-) ) related to this.

                    If I remortgage one of my buy-to-let properties and take out more money than the initial cost of the property, then invest in another property then I believe I don't get taxed on the remortgage amount because its wholly re-invested into property.
                    my understanding is that you can only claim relief up to the initial cost of the property at the time it went onto the rental market - though any capital expenditure since then could be taken into account to attract additional relief.

                    Comment


                      #11
                      Hi MisterB

                      Thanks for the reply.

                      My understanding, and I class myself as a beginner at all this, is that any money you remortgage up to the initial purchase price of the property can be spent however you wish and you won't face any taxes. But any money taken out thats more than the initial purchase price must be spent on property in order to still not face any taxes.

                      The above could be incorrect, so would need someone on here thats an accountant to clarify.

                      But my main query is if I remortgage a personal property and then use the money in my limited company to purchase a property, am I subject to any taxes?

                      Thanks

                      Brendan

                      Comment

                      Latest Activity

                      Collapse

                      Working...
                      X