Ask the Experts video transcript
Sarah: Any last minute tips? If somebody’s nervous about whether or not they’re going to qualify for a mortgage as a first time buyer, what tips would you give them to make sure the bank says yes?
Craig: Well the first thing I’d do is go and have an honest conversation. If you go to the bank or the building society you have a current account with, obviously they can kind of look at your account and see how you manage it and look at your incomings and outgoings, so that will give you a view of what they think you can borrow. They’ll normally – most lenders will do something called an Agreement in Principle where they’ll kind of say in theory we’ll lend you this – it’s not binding – that allows you then the confidence to then go and look at houses and it does mean actually if you find something you like, it’s quite likely to be successful – you still have to have a survey and all those kind of things, but there’s a reasonable, pretty good chance of success. So you go kind of fore-armed. The other thing I’d say is go and talk to a mortgage broker, they can look at the whole of the market, all the different lenders and possibly find a lender that’s right for you and again give you a clear idea of how much you can borrow and what you need to do. So, you know, I’d go and talk to people.
Sarah: And Holly, what’s your last expert tip for a first time buyer?
Holly: I would say get your credit report, go and see a broker and talk about the money side of it first before you even start looking and just make sure you have saved the biggest deposit you can possible, because it will save you money in the long run. For every extra five percent you save, your mortgage rate will drop.
Craig: That’s right.
Audience 1: As the sole director of a small business I was wondering whether it might be better to buy personally, or buy through the business, if you like. You know – what the pitfalls might be by doing that or which would be more advantageous to myself really.
George: I think the first thing is – you’ve got to - if you’re buying through the business, it’s not yours – it’s owned by the business. So if anything happens to the business, you’ll lose the property as well.For me that’s the biggest pitfall – you’ve got to be really careful of that. I mean, you should probably speak to your accountant about what the tax benefits are to you personally, because it can work in your favour but sometimes it can work against you, depending on what your personal situation is. But the biggest thing is the level of - if you like - risk by having it in the business. And obviously, if you sold the business, you’d have to sell the property as well – unless you did some sort of clever legal transaction as part of that - you know – so just, you’ve got to be really really careful with that. And it depends how many properties you’ve got, or whether that’s going to be your property. I mean, I’m assuming you just want one – because that’s why you’re here, but generally, generally it’s better for you to buy it personally.
Craig: And normally, the other thing on tax is obviously, that if you were to live in the property, which presumably would be your intention, you’d be liable for benefit in kind tax. Because the company, even though it’s your company, is providing you there, so you’d be getting a tax bill for living there.
Whereas obviously one of the benefits with owning with own home, as I’m sure you’re all aware, is, if you do sell a home, make a profit, it’s, if it’s personal residence, it’s tax free.
It’s also, from a lender’s point of view, you wouldn’t be able to get a standard, kind of, residential mortgage that you would get on the high street, you’d be then talking to the, kind of, business banks, which makes it slightly more complicated and often more expensive.
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.