Getting Loan to buy Shares in Company I Work For?

[Swango1980]

I could have an option in buying shares in the company I work for, buying a fraction from one of the two current share holders. I've money in the bank, but not to fully fund what is on offer. Any recommendations in how to loan the rest (apart from finding a wealthy family member). The loan would be under £50K. Another piece of information that might be useful, I currently don't have a mortgage as I paid that off already (so can't do any restructuring with an existing mortgage).

Thought it might be worth posting in here on the off chance anyone has any experience in it, before I spend a day on Google.

 

[jim8flog]

If you are of the right age why not a lifetime (equity release) mortgage .
Repayments and interest payments are usually optional (beware of how much you are adding the original loan amount each year if you make none. When I did mine I was able to find a no fees deal, the increase in the amount owed has been far outstripped by the increase in house value.

You will not get a better interest rate.

 

[RichA]

I could have an option in buying shares in the company I work for, buying a fraction from one of the two current share holders. I've money in the bank, but not to fully fund what is on offer. Any recommendations in how to loan the rest (apart from finding a wealthy family member). The loan would be under £50K. Another piece of information that might be useful, I currently don't have a mortgage as I paid that off already (so can't do any restructuring with an existing mortgage).

Thought it might be worth posting in here on the off chance anyone has any experience in it, before I spend a day on Google.

Did you actually close the mortgage or just pay off the balance?
It might still be available if the latter.
As you're still working, why not get a new small mortgage?

 

[Swango1980]

Did you actually close the mortgage or just pay off the balance?
It might still be available if the latter.
As you're still working, why not get a new small mortgage?

Yeah, closed it off about 3 years ago. Will take on board yours and Jim's responses. Soon to turn 44, so should still have a few working years to pay things off

 

[Bazz]

No advice but mortgage free at your age

 

[Fade and Die]

What about a secured loan? Interest rates are lower than an unsecured loan and you can normally have it over a longer period.

 

[Swango1980]

What about a secured loan? Interest rates are lower than an unsecured loan and you can normally have it over a longer period.

Is a secured loan just like a mortgage if your asset is your house?

 

[The Fader]

As you're in employment with an unencumbered house, and presuming the size of mortgage you need to buy the shares
will have a relatively modest LTV, that should keep the interest rate competitive.

Most lenders would be delighted to have your business, as long as you have no "nasties" on your credit report.

Shop around and see what's available.

 

[jim8flog]

Yeah, closed it off about 3 years ago. Will take on board yours and Jim's responses. Soon to turn 44, so should still have a few working years to pay things off

Sorry you are too young for an equity release mortgage also if you ask a mortgage company for one and give them the real reason they might refuse.

 

[Fade and Die]

Is a secured loan just like a mortgage if your asset is your house?

Yes, having already paid off your mortgage once you would be an attractive customer to any lender.

 

[Voyager EMH]

A company I worked for back in the 1990s and early 2000s had a scheme where you could shave a bit off your wages each month into a savings vehicle to buy shares at an agreed price at the start of the 3 or 5 years depending on which of those two schemes you chose. If the share price dropped below that price you simply got your money back with simple interest.
Seemed a good scheme and I joined.
A few years in and the company took out a £70 million pound loan to acquire the controlling interest in another business.
This caused the share price to plummet. The share price is what the company is worth to a buyer. A buyer would have to acquire that bank debt. Hence the drop in price.
I left that company before my scheme matured and I got my money back.
A previous scheme that I had not committed to did fairly well. This prompted one chap to buy some more shares with his own savings. This did not do so well.
Several years later the loan was paid off and the share price rose dramatically again.

 

[Captainron]

your mortgage is usually the cheapest debt you have in terms of interest rate. Raising money against an asset with a lot of time to pay it back if it doesn’t go to plan seems like a risk worth investigating. Is the potential reward worth the option in your eyes?

 

[Swango1980]

your mortgage is usually the cheapest debt you have in terms of interest rate. Raising money against an asset with a lot of time to pay it back if it doesn’t go to plan seems like a risk worth investigating. Is the potential reward worth the option in your eyes?

Yeah, definitely worth the risk.

I think a well known genius once said "this time next year, we'll be millionaires". Think he had a brother called Rodney

 

[Captainron]

Yeah, definitely worth the risk.

I think a well known genius once said "this time next year, we'll be millionaires". Think he had a brother called Rodney

You know the answer then….

Buy a lock up and do house clearances. Hope you find a watch

 

[Bunkermagnet]

Can you afford to lose the money? If you can, do it. If you can't, don't.

 

[Mark1751]

Some lenders won’t allow you to borrow for speculative investment's, I’ve done it in the past and it’s worked out but it’s a risk.

Ive been buying shares in my employer for years (monthly share save schemes) and have that many I need to diversify as majority of my investment pot is in one company/sector (banking) but at the discount I get and the no risk or loss while in the scheme makes it very tempting to keep taking part.

 

[Bunkermagnet]

My wife used to work for one of our banks, which would give them shares as a yearly bonus. After 24 yrs she had £14k's worth. I told her to sell them, but she insisted they were safe and would only go up as that is what the bank big wigs had told them. Many other staff bought extra shares, as they consisdered them a risk free invetsment.
2 weeks later they went pop, and her £14k's worth wouldnt have bought a dog poo bag.

 

[Hobbit]

Will the dividends service the debt, and will the share value increase in line with what you’d get if the same amount of money was invested in something like an ISA? Is it a subconscious emotional purchase, and would the same amount of money be better invested in a blue chip company?

I’m risk averse, and the wrong person to ask. If I was buying shares it would be in a company with a diverse business portfolio, e.g. GE or Tyco.

 

[PNWokingham]

mortgage will be the cheapest way - strong LTV so i would look for a 5y fixed near 4%