Hi - We have a contract cleaning business and used all our savings and profits to build the business. It is now making good money and my accountant said it would be worth around $400,000. We pay $700 rent a week and we want to know if it possible to buy a home using the property and the business as security. We would like to buy around $600-$650,000? Thanks

Hi Mina,
Not in my understanding. You could use the business income for servicing but the business has no value to a mortgage lender.
If you are making $200,000 per year, the bank would be questioning why you don’t have 5% in savings
I would suggest it’s time to pay yourselves wages and save some money outside the business if you are looking to buy a house.
By all means speak with a broker who could outline what lenders will be looking for so that you can get yourselves ready
Best of luck
Scott

Dear Mina,

Hope you are well,
It sounds like you have a very good business that is making money and growing,
Depends on the bank you are with, they may offer you an overdraft on the business that you can use for cashflow and start paying yourself a reasonable income rather than pouring all profit back into the business. The better your cashflow the higher your overdraft limit can be.

Assuming your business is over 2 years old and the profit is consistent, and Once you have 5% of the purchase price $37,500 saved for 3 month, you can then look at purchasing a home,
Mind you, you would be better off having around 9% so that you can have a better interest rate and a better chance to get approved for the loan.

I would be happy to speak to you and help on putting a plan to save those funds,
Please feel free to call me on 0414 545 643.

regards