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Mortgages - private shares

  • 01-07-2020 11:47pm
    #1
    TimmyOToole1
    Registered Users Posts: 1 ✭


    Hi folks,

    Appreciate your help. I have a friend who is looking to get a mortgage, but will struggle with salary, deposit. They are a shareholder in the company for whom they work; is there any way the value of these shares can be taken as an input towards securing a mortgage, or will banks not take them in to account. They would have some value theoretically, but a limited market (private company).

    Cheers for any insights.


Comments

  • #2
    Tommy Pickle
    Registered Users Posts: 29 ✭Tommy Pickle


    TimmyOToole1 wrote: »
    Hi folks,

    Appreciate your help. I have a friend who is looking to get a mortgage, but will struggle with salary, deposit. They are a shareholder in the company for whom they work; is there any way the value of these shares can be taken as an input towards securing a mortgage, or will banks not take them in to account. They would have some value theoretically, but a limited market (private company).

    Cheers for any insights.

    Banks wont take any share holding into account, they would need to sell the shares and use the money from the sale to try achieve the mortgage.


  • #3
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    A shareholding in a private company is 100% useless as security.

    For all sorts of reasons....

    1. Liquidity, no open market where they can be sold. This is the overriding reason why no third party is interested in your shareholding.

    2. If there is a majority shareholder, he can stuff the board with his cronies and, at his behest, they can vote to not pay any dividends i.e. to starve you out. At which point, you have no option but to accept whatever derisory offer he makes for your shares.


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