Will a business loan affect your mortgage application? That could be the one question you are burning for answers right now.
First of all, loans can be stressful but not all loans are bad – initially.
Think about your ability to run your business comfortably without any form of loan when you could not afford any expenses that come with it. Think about how badly your business would have gotten if you didn’t reach out for the business loan you reached out for when you did.
Business loans have proven to be a lifesaver for both large corporations and small businesses but how badly will a business loan affect your mortgage application or even financial credibility as a person and credit?
There are several reasons why your business should reach out for a loan but after all is said and done for your business and the loan you took out as the signatory to the business, will a business loan affect your mortgage application?
We will find out if your business loan will affect mortgage application below but first, how do loans affect a mortgage application?
How do Business Loans Affect Your Mortgage Applications?
Basically, both traditional loans and mortgages are still forms of loan facilities but when it comes to the extent to which it affects you as a person, there is a limit.
A business loan should not affect your mortgage application especially if your business is a limited liability company.
A limited liability company is a company or business structure in which its owners have limited liability concerning the actions of the company.
What this means is that the structure offers the members some form of a shield (as individuals) or protection which entails that the liability of the company cannot be recovered from the personal assets of the owners.
If however, your business is not a limited liability but a sole proprietorship, there is every chance that the loans will affect your mortgage application if your financial track record cannot carry it.
That in turn answers the question of if a business loan will affect a mortgage application?
Can You Get a Mortgage Against a Business?
What then happens when you want to get a mortgage against a business? Can you get a mortgage against your business these days?
Well, yes. You can get a mortgage against your business as long as you use the property for a form of commercial benefit that generates an income for the business.
So if you want to get a mortgage for, say, residential property for the reason of generating a rental income for your business, you can go ahead as there is a commercial mortgage or portfolio finance for situations like this.
If you, however, want to take out a personal mortgage through your business then that is not possible.
Taking out a [commercial] mortgage can be very beneficial to your business as it comes with several benefits like helping your business own the property at the end of the mortgage term, reduced expenditure per period when compared to paying rent, etc.
How about your Personal Credit? Does a business loan affect personal credit? Let us find out.
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Does a Business Loan Affect Your Personal Credit?
Personal credit is based on the history of your financial activities and is tied to your Social Security Number, unlike a business credit that is tied to your EIN.
Since your business is a separate entity from you (as an individual), its financial history and activities do not affect your Personal Credit – especially if it is limited liability.
Just like getting a business loan should not affect your mortgage application because it is a separate entity, it should not affect your Personal Credit because both entities are entirely different and treated as such – straight answer!
Best Mortgage Lenders for Small Business Owners
Who are the best mortgage lenders for small business owners?
Getting a mortgage as a business owner should only be from the very best mortgage lenders with the best rates that will not take advantage of you.
There are several mortgage lenders to consider but the most important thing to look for in a mortgage lender is how competitive their terms are and what their repayment terms are.
Here is our pick for some of the best mortgage lenders around in no particular order. This list is our opinion and can change with time.
- Quicken Loans
- Navy Federal
- Veterans United
- Bank of America
- Better Mortgage
We can provide other mortgage lenders suitable to work best with businesses as we see fit with time.