/ Author: SPF

Even the most successful and careful business owners may be facing significant challenges from the impact of coronavirus on the local economy and whilst there’s some support from the States of Guernsey, for certain sectors it may not be enough to take the business through until ‘normal’ trading resumes.

Of course, business loans are available but a simpler route to raising funds may be to use your property and there are two main ways to do this.

Remortgage

If you have sufficient equity built up in your home and a low enough loan to value, then you can arrange a new mortgage and free up capital at the same time.

For example, if your home is worth £700,000 and your mortgage is currently at £400,000 you can remortgage up to £630,000 at just 1.7%, fixed for 2 years, freeing up over £200,000 to plough in to your business.

Interest-only mortgage

Switching to an interest-only mortgage doesn’t give you a lump sum, but it can significantly reduce monthly outgoings.

An interest-only mortgage allows you to pay just the interest charged each month for the term of the loan. You don’t have to repay the amount you’ve borrowed until the end of the term.

For example, a mortgage of £400,000, over 25 years at an interest rate of 3%. On a repayment basis, you would pay £1,896 a month.

On an interest-only basis, you would pay only £1,000 a month. It’s a significant reduction in monthly repayments, but at the end of the 25 year term, you would still owe £400,000 of capital to the lender.

How we can help

If you’re in a position where you think your home could help support your business through these difficult times then talk to us. We can advise you of your options and give you a decision in principle, ready to act when it is possible to undertake valuations.

To find out more, contact us today on 01481 715234 or email [email protected].

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