While the option to stretch your income to get a larger business mortgage may be tempting, it isn't a smart move.
Lenders will happily lend you four, fix, six, even seven times your projected yearly income. They're not really doing you a favour. This will end up costing you a duke's ransom in interest payments.
Try to beg or borrow money from relatives and friends before applying for a business mortgage in the UK. Revise your business plan. Be practical. How much do you really need to realise your dream?
Some people can't grasp the meaning of large sums of money. They take months to buy a fridge, but get a £200,000 mortgage on a whim. It's a buzz! Reason goes out the door. They may have been in a dead-end job before, and now they're going to realise their dream, by crackey!
It's understandable. There's a certain amount of romance, if you're a first-time entrepreneur. You've got your redundancy money, and now destiny beckons. You're excited, the wife is excited, the kids are excited.
Now is the time to get out pen, paper and calculator and do some sums. What's the worst that could happen? Do you have a contingency plan? Do you have health insurance, some money put away for a rainy day, is the kids education secured?
Time for brutal reasoning. Is your business one that:
- There's a big demand for;
- There's a fat net profit on each item sold;
- You have a Unique Selling Proposition;
- You're certain you can beat the established competition;
- Other people have had success with?
Remember, the mortgage will have to be paid before you can take any profits from your hard work.
Note that that you can always remortgage again later, if you end up getting a mortgage with a sub-prime lender and aren't happy with your interest rate. Maintain a good repayment history and work to improve your credit rating so you will be ready to remortgage again when the time comes.
Keep in mind the re-mortgaging involves brokers fees and others costs, so in the event you do this, make sure you come out ahead financially.
Mortgages can be complicated. The choices are mind-boggling and if you try to buy a business mortgage UK on the internet without seeking financial advice you could easily make the wrong choice. You could end up wasting thousands of pounds. Don't take the risk - speak to a business mortgage UK advisor. Get more than one opinion, preferably from a neutral party, like an accountant.
Sites like this one are geared up to sell you a business mortgage UU, not to give impartial advice.
Ask about business mortgage UK today!
Lastly, try to keep the duration of your mortgage as short as you can. Pay it off quickly, then you can reap the rewards of your hard work, instead of making your lender richer.