Scenario:

Self-employed applicant wanting to release equity against unencumbered home for a cash flow injection into his business.  Applicant had not done tax returns as yet, so needed to be assessed under a low doc basis.

Outcome:

The lender was able to verify income from 4 quarters BAS and 3 months trading statements. The applicant had clean credit history, and was considered on a Low Doc loan basis. Using home loan rates the lender was able to consider funding any business purpose under this product.

This loan used a residential property for business purposes.

Another way to improve cash flow on a commercial property may be to use capitalised interest so cash flow can be improved.

In the commercial market, different lenders have different appetites as to what type of commercial lending they are looking for.

This appetite is constantly changing as the banks balance of different industries is changing all the time. One bank may be keen to finance rent rolls, while another may already have too many on their books.

Specialised industries include the following:-

Accomodation / Motels
Accountants
Aged Care
Caravan Parks
Childcare
Clubs
Dental
Financial Planners
Funeral Parlours
Hospitals
Legal Practices
Liqour Stores
Management Rights
Medical Practices
Newsagents
Pharmacies
Pubs
Rent Rolls (Real Estate)
Retirement Villages
Self Managed Super
Storage Facilities
Schools (independent)
Supermarkets (independent)
Taxi Plates
Vet Clinics

Below is a guide as to how the different banks have different appetites.

This type of lending is normally done on a full document basis.

One of the key principles in commercial finance is to try and walk in the correct door the first time around. Once the loan has been to a few different lenders a loan can be termed “shopped around”. Should it receive this status, even though it may be a perfectly good loan , a prospective lender may become weary.

If you are looking for guidance in regards to specialised lending, please call us. Remember, we wont charge you for our service, as we are paid by the lender.

This is a new years commercial loan promotion.

It would have to make it one of the best commercial rates in the market.

For any commercial loan that we introduce through this campaign we will also refund $500 towards your legal fees after the commercial loan has settled.

Commercial Loans From 7.99%

New Year Special Offers

1. Special life of loan discount for loans $100,000 – $500,000
   1. Option 1 – 8.89%p.a with a $30 monthly fee – that’s 0.80% discount off the current standard variable rate
   2. Option 2 – 8.99%p.a with nil monthly fee – that’s 0.70% discount off the current standard variable rate

1. Special life of loan discount for loans over $500,000
   1. Option 1 – LVR <65% 8.59%p.a with a $30 monthly fee – that’s 1.10% discount off the current standard variable rate
   2. Option 2 – LVR >65% 8.69%p.a with a $30 monthly fee – that’s 1% discount off the current standard variable rate.

1. Discount split loan 1 yr introductory rate special when split with a 3 year fixed rate
   1. Introductory rate of 7.99% for first year on variable rate portion, reverting to standard variable rate on completion of introductory period – that’s 1.70% discount on the variable portion for the first year.
   2. $30 monthly fee applies to the variable rate portion
   3. Minimum $300,000 loan size with $100,000 variable portion
   4. Current 3 year fixed rate 8.69%p.a
   5. Monthly fee only applies to variable rate while on introductory rate, nil month fee payable once loan reverts to standard variable rate.

Commercial loans secured by residential security 7.99%p.a

Commercial line of credit rate 9.24%p.a

The Fine Print

Term and Conditions

-       Specials available for applications received 1 January 2011 to 31 March 2011

-       Discounts are off the Standard Variable Commercial Benchmark Rate – Currently 9.69%

-       Discounts are only available for commercial loans secured by commercial properties

-       Discounts are only available for new funds.

-       All loans are to be full doc

-       Standard application, valuation & legal fees are applicable

-       The lender retains the right to change/alter or withdraw the offer at anytime.

All loans must be clean credit and are subject to lender’s credit criteria

Question:   Is it possible to get a business loan on a residential property at home loan rates?

Answer:   A full document company loan with ABC Pty Ltd as the borrower, Mr and Mrs D, as sole directors, shareholders, and guarantors up to 80%, on family home owned by Mr and Mrs D.

Call us, it may be possible!!

Examples of what may be done:

Providing lender has residential security they will lend for nearly any purpose!!! Here are some examples:

Example 1.

Residential security property – $850,000.
LVR required – 90%
Loan size – $765,000

Purpose:
Refinance existing residential mortgage – $300,000
Purchase commercial factory for business – $465,000
Total loan – $765,000

Lender not only did this, but split the loan over two borrowers (individual and company name) allowed a 90% (inclusive of LMI, LVR), but also gave home loan interest rates on both splits and a 30 year term on both splits as well (with a five year interest only period….)

Example 2.

Residential security property – $850,000.
LVR required – 90%
Loan size – $765,000

Purpose:
Refinance entire commercial portfolio
Commercial overdraft – $200,000
Term Loans – $450,000
Hire purchase, leasing and credit cards – $115,000
Total loan – $765,000

Lender did this by utilising an Offset Account and fixed rate loans. The Offset Account and various fixed rate loans at residential rates. Utilising a 30 years term on all accounts with a five year interest only period this not only saved the client more than $24,000 pa in interest but also delivered more than $70,000 p.a. cash flow back into the business

Example 3.

Residential security property – $850,000.
LVR required – 90%
Loan size – $765,000

Reduce existing commercial mortgage of $1.0 million to $235,000

Client had a $1.0m loan over a commercial property at commercial rates. By utilising lenders resi rates (and terms) for resi properties the lender allowed a reduction of $765,000 over a 30 year term (5 years interest only) at home loan rates.

Whilst client still has a $235,000 commercial loan at commercial rates the lender not only saved him more than $66,000 in interest but also injected more than $72,000 pa in cash flow back into the business

In conclusion, if you are looking for a commercial loan at home loan rates, call us. Remember, in this instance the rate is determined by the nature of the security, not the purpose.

Rates from 8.99%

Full Document Loans only

Up to 75% Lending to Value Ratio

If you don’t have full financials consider Low Doc Commercial Loans

How the Money System works! Very funny!!!

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