How to Handle Your Annual Loan Reviews

Loan-Review

FOR COMMERCIAL PROPERTY INVESTORS with significant borrowings, one of the biggest headaches that you can encounter when dealing with banks are the annual reviews and short loan terms.

These facilities are costly in accounting expenses, time and money, particularly for sophisticated investors with more complex borrowing structures. [Read more…]

Commercial Property: Get Your Loan Structure Right

BusinessLoan

WHEN LOOKING AT debt strategies for any business, there are a number of aspects you need to consider. These would include things like … asset protection, interest rates, fees, ongoing service requirements, access to capital, alternative products and so on.

The weighting for each of these factors will depend on the particular transaction. [Read more…]

Important Tips for Development Finance

development-finance

IF YOU ARE funding a property development, financing is the most important aspect to consider. After all, without finance the project cannot proceed.

Below, I have summarised the three most important factors for getting bank funding for a project. [Read more…]

Commercial Finance for Business

business-finance

IN THE CURRENT low-rate environment, demand for property funding has spiked considerably over the past couple of years, fuelling some concerns in various quarters for a property bubble.

As a result, most of the major banks have loan portfolios heavily weighted to property.

Slowly but surely, this has resulted in increased competitiveness for the small business sector, which has resulted in some attractive terms being offered for small business loans.

Below are some tips about business loans in the current market. These will be useful if you are looking at purchasing a small business or expanding your existing business:

Borrow at Home Loan Rates

If you have equity in residential property, you may be able to borrow at home loan rates.

The major banks tend not to allow business purpose for loans through their home loan departments, and will unnecessarily sell their customers into more expensive business loan products.

If you have equity and can afford the repayments, there is no reason to have a bank overdraft (sold at rates up to 13% pa) or even bill facilities that are subject to frequent review.

Before taking out a business loan secured by a residential property, explore the market for possible home loans for business use, they will be much cheaper and more flexible.

A suitably qualified mortgage adviser will be able to do this for you at no cost.

Loan Terms are as Important as Loan Rates

Most businesses live and die on cash flow. Therefore it is important to look past just the interest rate and fees on a loan and consider actual repayments.

This is the major benefit for using home loans where there is sufficient equity in residential property as they can be taken out interest only and usually rolled over continually.

Banks offer “unsecured” business loans against some businesses.

But these are subject to sharp amortisation periods (anywhere from 1-7 year loan terms). So consider the actual repayments as well as the rate before progressing with a particular loan product.

Ensure You Have Sufficient Capital

You are unlikely to get over 50% of the purchase price of a business. The exception to this is for well-established franchises, for which borrowing can be as high as 70%.

As discussed earlier, you may be able to use equity in property to bridge the gap, but you need to consider from where the capital will be raised.

If you are purchasing a franchise, banks will hold approved franchise lists outlining the terms that the bank will extend against a particular business.

It is worth speaking to more than one bank (or engaging a mortgage adviser to do it for you) to make sure you are getting the best deal as banks will vary on terms extended against each franchise.

Learn About the Different Finance Options on Offer

For existing businesses there are many different types of financing that can assist with cash flow and growth strategies.

These include the following:

  • Asset financing
  • Debtor financing
  • Invoice factoring
  • Trade Finance
  • Credit Insurance
  • Overdrafts
  • Bank guarantees

BOTTOM LINE: Too many business owners learn about these products only when they are in difficulty. Smart management demands that the right debt strategy be an integral part of any business planning.

 

Commercial Property Loans For Pro Investors: Part 2

Commercial-Property-2

LAST WEEK, I covered the reasons why it can be very difficult for asset-rich investors (who are no longer working or have scaled down their working) to get a loan.

Thankfully to date, the NCCP regulations do not apply to loans acquired for a commercial and business use.

Therefore, you have more options for investing using commercial borrowing, then you do for residential borrowing. The following tips will help you maintain your eligibility to borrow for longer, after stopping work. [Read more…]

Commercial Property Loans For Professional Investors

Commercial-Property-1

YOU’VE WORKED HARD your whole life; and had a successful career. You have used your money wisely, and your investments have been mostly successful.

As a result you have built up a solid asset base with a number of properties, which are positively geared and provide you with reliable rental income.

It is now time to enjoy life, scale down your workload, travel and do the things you always wanted to do.

You stumble upon the perfect Commercial property opportunity that will provide you with enough rental income to have the lifestyle that you want. [Read more…]

Commercial Property Loans: Fixed Rate for How Long?

 

Commercial-Property-Loans2

 

IN PART 1, we gave you some advice if you are deciding whether or not to fix your loan.

Today, we continue where we left of with three guidelines to help you avoid a few more common pitfalls when it comes to fixing a loan. [Read more…]

Commercial Property Loans: To Fix or Not to Fix?

Commercial-Property-Loans

INTEREST RATES REMAIN at historically low levels. And the competition for business between banks and non-bank lenders is fierce.

As a result, you can find some very attractive fixed rate options in the market at the moment.

However, if you are considering fixing an existing loan or taking out a new fixed loan, you must understand some fundamental rules that govern these loans.

The following guidelines will help you structure your fixed loans to provide the most benefits for both your residential and commercial investments. [Read more…]

Limit The Security You Grant to Your Lender

Security

IN MY LAST ARTICLE, you read about the various securities lenders can take over your property, in addition to mortgages.

This article will highlight various options for improving your security position when borrowing as a means of maximising your asset protection. [Read more…]

Part 2: More About Your Loan Security

Loan-Security-2

IN THE LAST article, you read about two different types of security that lenders can take other than the mortgage. They were “Fixed and Floating Charges” and “Personal Guarantees”.

However, there are a few other forms of security that you should be aware of before entering into any agreements. Read on to find out more. [Read more…]

What Creates Security for Your Loan?

Loan-Security

WHEN YOU TAKE out a property secured loan, you understand that a lender will register a mortgage against the property that is being secured.

However, typically, when you read through actual loan agreements, the mortgage is just one part of the security that is taken.

In this article, we will be looking at some of the other types of security that lenders will typically request when applying for a loan. [Read more…]