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Will A Business Loan affect my Mortgage Application?

  • 16-08-2021 10:59am
    Registered Users Posts: 245 ✭✭ Panic Stations

    Mods feel free to move this to relevant thread if you see fit.

    So I'm currently in the middle of starting up a new business and will need some capitol to get it off the ground. Ideally around 10k-20k which I'm considering taking out a business loan for.

    I'm currently self employed and have been for the last 2.5 years with another one of my businesses.

    Myself and my partner are applying for a mortgage together and hoping to buy somewhere as soon as possible.

    I have 2 questions regarding potentially taking out this loan

    1) Will this loan affect my mortgage application? The new business is registered as a private limited company.

    2) If I take out a business loan am I personally liable to pay it back or would it fall under the liability of the business?

    Thank you in advance.


  • Registered Users Posts: 3,540 ✭✭✭ true-or-false

    If it's a limited company, you have limited liability.

    However, as far as I know, lenders can/will ask for a personal guarantee, especially if it's a new business and there's no security involved. So you're not liable for the loan as the owner of the business, but you are liable as a guarantor. A guarantor can be held liable for the full amount of a loan they guarantee, so I would guess it would be treated as a liability when calculating your mortgage approval.

    I'd recommend talking to a mortgage advisor/broker in advance so that you know where you stand on the mortgage front, and similarly make sure you're aware of what it means if you're asked to provide a guarantee over the business loan. A lot of people sign guarantees assuming they'll never be called up on it, but in many cases that's a big mistake.

  • Moderators, Business & Finance Moderators Posts: 7,810 Mod ✭✭✭✭ Jim2007

    It is extremely unlikely that any bank will give a start up an unsecured loan. So you can expect to have to provide a personal guarantee for any loans granted to your company and accordingly it will be considered in you mortgage application.

    @mods: move to banking & insurance forum.