Do I really need a finance broker?

Trusting someone with your finance isn’t a decision you should take lightly. Here’s how you can benefit by using a broker.

A plunge in sentiment towards banks, stricter lending criteria for investors, and better-educated consumers have all led to more than half of Australian home buyers now borrowing via a broker.

It’s easy to see the attraction: working out what is on offer from each institution can be time-consuming and confusing. And if you’re not careful, you could be damaging your credit score by applying for loans you’re unlikely to ever get approved for.

Trusting someone with your finance is not a decision you should take lightly so if you’re looking to take out finance or renegotiate an existing loan, here are the benefits of using a finance broker.

What are the benefits of using a broker?

They don’t work for the bank

A broker will take the time to get to know you to make sure they choose the finance that’s right for your situation, challenges and goals. They will know which lenders will have the product that will meet your needs. And, they negotiate for what’s right for you, not what’s right for one particular lender.

They compare the market for you

When looking for a loan it can be a bit of a minefield with so many different options available. Which bank? Which product? What about Building Societies, Credit Unions and Mutual Banks?

A loan broker can compare many different lending options from a number of different major banks and second-tier lenders. Even if you’re fixed on using your current bank, a broker can still advise on which product to choose and negotiate with your bank to ensure you get a competitive loan product for your needs.

You could end up with a much better deal

A broker will sit down with you to work out your financial goals and assess your borrowing power before they go about researching the market, comparing rates of various banks and lenders, and negotiating the loan on your behalf. A broker that stands out is one that provides personalised assistance and competitive choices.

They know how to get your application over the line

A skilled broker will know how to “package” your application to appeal to specific lenders. They’ll know exactly what strengths to highlight in your application and how to address any weaknesses. They understand lender policies and requirements which helps them deliver better outcomes tailored to your individual needs and circumstances.

They’ll help you get your ducks in a row

For a loan application process that’s smooth sailing, a good broker will be able to tell you exactly what paperwork you need in order to apply, and how to navigate any obstacles in the criteria set by different lenders. They’ll also identify anything you can do to improve your chances of being approved for a loan – including improving your credit rating and consolidating debt.

Lenders are wary of serial applicants so it’s important that you are presented in the best possible light, making it easier for your broker to match you up with a suitable lender and product first time round.

They value long-term clients over short-term wins

A good broker doesn’t disappear once your loan is approved. After settlement, your broker should follow up with you and provide you with an annual review of your loan. It means you can focus on living your life while your broker focuses on keeping your loan competitive and moving you closer towards your long-term financial goals.

How much will a broker cost?

For most home loans, the service of a mortgage broker is complimentary. Sometimes a brokerage fee can be charged for complex or unusual situations, including commercial properties. The reason why a brokerage fee may be charged is simply because of the time it can take to find a suitable lender and negotiate a strong deal on your behalf. Even so, in most cases, you’ll actually pay less by using a broker than going directly to a bank since they can often negotiate a better deal for you.

Let’s talk finance

To find out how The Loan Tailor can help you with your financing needs, contact Andrew Pantelas on 0410 731 292 for an obligation-free chat.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Credit Representative 505348 is authorised under Australian Credit Licence 389328

Your full financial situation will need to be reviewed prior to acceptance of any offer or product.

Working Capital Finance might be the answer to your business cash flow problems

A working capital loan when you need it most can keep you in business. Here’s what you need to know about working capital finance

Working capital finance is a business loan that can help you take care of your day-to-day costs

This type of short-term financing is designed to help you cover immediate operating expenses, even if the business isn’t making enough working capital to cover those expenses. A working capital loan also means you’ll have funds at hand when you need them to finance growth and make the most of any opportunities when they arise.

What exactly is working capital? When should you take out a working capital loan? What are the benefits of a working capital business loan? Let’s take a look.

What is working capital?

When you subtract current liabilities from current assets, the amount left over is your working capital. It’s the money you use to keep your business operating by meeting your short-term expenses, including rent, payroll and inventory.

When should you consider a working capital loan?

Inconsistent cashflow can be the death knell for a business. If your cash flow is suffering, paying bills on time and being able to run your business efficiently becomes an uphill battle. When cash is running low or you’ve already earmarked your liquid assets, a working capital loan could be the answer.

Some of the reasons you might consider a working capital loan for your business include:

To pay employees

Juggling cash flow and meeting your payroll obligations can be tricky. A working capital loan can be used to keep your business on track, and on top of it’s financial obligations.

To make short-term inventory purchases

Using a working capital loan to purchase extra top-up stock or inventory is a great way to ensure you don’t miss out on taking advantage of busy periods.

To cover seasonal fluctuations

Businesses that are at the mercy of seasonal or cyclical sales cycles usually rely on working capital loans to tide them over in periods of reduced income. Seasonal businesses might also use working capital loans to purchase inventory in slower periods to get a head start on preparations for peak sales periods.

Similarly, during busy periods, sales may be soaring but payments received from customers don’t always keep pace. Working capital loans can help cover operational costs until invoices are paid.

Business Growth 

Working capital loans help fledgling businesses cover everyday expenses, pay their employees, hire new employees, and invest in growing and marketing their businesses.

New Business Opportunities

With a working capital loan, you’ll be able to purchase new equipment, invest in training, or ramp up your resources so that you can expand your business and take advantage of opportunities as they arise.

What are the benefits of a working capital loan?

You’ll keep your credit rating intact

A working capital loan when you need it most can keep you in business, without compromising your credit rating. Financial pressure can lead a well-meaning business into the trap of increasing their borrowing and falling behind on payments to creditors – all of which result in a lower credit rating. A lower credit rating means lenders will make you jump through more hoops when it comes to future borrowing and most likely charge a higher interest rate on money borrowed in the future.

Collateral isn’t always required

In general, working capital loans can be either secured and unsecured. Unsecured working capital loans are given only to those small businesses that can demonstrate a squeaky clean credit history and/or have little to no risk of default. If you qualify for an unsecured loan, you won’t need to put up your business, inventory or other assets like property to secure the loan.

Shorter loan terms 

Working capital loans are designed to inject cash into your business to bridge short term cash flow gaps. You can select the loan terms that work best for your business, typically between 1 -18 months.

Freedom over how you use the money

Banks and other lenders have very few restrictions on how you use the money. Working capital loans can be used for many different purposes; the decision is yours based on what works best for your business.

A lifeline when you need it most

Lenders understand that money is needed fast in order to meet immediate business debts. If you have someone who knows what the bank is looking for and can professionally package your application, you could receive the money in as little as one business day, though this varies between lenders.

Flexible repayment terms

Instead of tying up your cash flow for years to come, you can repay a working capital loan over a period of months thanks to flexible repayment terms. Another great feature with this type of finance is that the money is there if and when you need it, and you typically only start making repayments once you’ve drawn down on it.

Need to unlock your working capital to improve cash flow?

Call Andrew on 0410 731 292, or simply email The Loan Tailor at andrew.pantelas@theloantailor.com.au

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Buyer’s agents: a property buyer’s secret weapon

Commercial and residential real estate buyers are turning to buyers’ agents to help level the playing field. How could they help you?

It’s not surprising that many purchasers feel the property buying landscape is stacked in favour of property sellers. If sellers have agents, why can’t buyers? Enter the buyer’s agent. More and more commercial and residential real estate buyers are turning to buyers’ agents to help level the playing field.

How can they help if you’re buying property?

Buyer’s agents (or ‘buyer’s advocates’) are licensed professionals that specialise in searching, evaluating and negotiating the purchase of residential and commercial real estate on your behalf. A buyer’s agent is an especially attractive option for anyone who is short on time, confused about the market, or not sure how to negotiate with selling agents and developers.

Regardless of whether you’re purchasing residential or commercial property, a buyer’s agent can assist you throughout the entire process of searching to negotiating the purchase of a chosen property, and right through to settlement.

Another option for buyers is to seek out a buyer’s agent for the sole purpose of bidding for them at auction. This is a great choice for buyers who are confident in their ability to find the right property, but find the auction process intimidating or emotionally daunting.

Why use a buyer’s agent?

Access to ‘silent’ listings

A well-connected buyer’s agent will use their industry contacts to present you with a wide range of options, including access to ‘silent’ off market properties. Off market sales are property transactions that take place behind closed doors, without public advertising.

Speed-up the process

With the countless hours that go into trawling properties, making shortlists, and fronting up to inspections, outsourcing the effort to a professional can make perfect sense. A buyer’s agent will identify locations and property types that best fit your financial capacity and search criteria. You’ll get your time back to focus only on the properties that the agent has hand-picked to tick all your boxes.

Investing know-how

Buyer’s agents who specialise in investment properties can help you source the right type of property in locations with good prospects for capital growth. They understand market indicators and will use this knowledge to protect your from making an ill-informed investment decision that could cost you thousands of dollars.

Local market knowledge

It can be overwhelming purchasing property in an area you’re not familiar with. Having a buyer’s agent on the ground can give you the advantage of local market knowledge and help guide you towards buying in the right areas, at the right price. Spotting a top performing property and steering buyers away from potential financial disaster takes considerable research skill and due diligence.

Bidding and negotiating

One of the most popular reasons people use a buyer’s agent is to support them during the auction and negotiation process. There’s no room for emotion when negotiating a property deal so it helps to have someone objective to represent your needs when it’s crunch-time. Buyer’s agents understand the nuances of the process and bring the confidence, emotional detachment and strategies necessary for a successful purchase.

How much does it cost?

If you choose to work with a buyer’s agent, you can expect to pay either a flat engagement fee, or a percentage of the property purchase price (usually between 1-3%). The cost will depend on a number of factors including your property price point, the area you’re looking to buy in, and the complexity of your search criteria.

Using a buyer’s agent only to represent you at auction would likely incur a lower fee as there’s much less time involved.

A final word

There’s never a guarantee a buyer’s agent will save you money. However, what they will save you is time and stress, and with their superior negotiation skills and extensive knowledge of the property market data, they’ll give you the best chance of avoiding overpaying or buying the wrong property.

The Loan Tailor uses unique industry knowledge and expertise to offer you tailored buying and lending advice. Get in touch or call Andrew on 0410 731 292 for a no-obligation chat on how to finance your next property purchase, or for a referral to a trusted buyer’s agent.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Start your commercial investment property journey with the facts you need

If you’re a would-be commercial real estate investor, chances are you’ll be thinking about how to finance a commercial property investment purchase.

Lenders have created products to cater to the financing needs of commercial property investors, meaning that commercial property loans come in all shapes and sizes. More than ever, finding the most suitable finance will require research and some commercial loan market know-how.

Here are 6 things you should know about commercial property loans before you apply for finance: 

1. You’ll need a decent deposit

When you are applying for a commercial real estate loan, the banks or lending institutions will generally lend between 65% and 70% of the value of the property (this is called the Loan to Value Ratio or ‘LVR’). There’s no Lender’s Mortgage Insurance on offer for commercial loans so you’ll either need to come up with a large deposit or be able to access a significant amount of equity to satisfy the LVR criteria.

2. Loan terms are shorter 

For commercial property, you can expect loan terms generally between 3 to 15 years. Principal & interest repayments are normally assessed over 15 years, irrespective of the loan term. The upshot of this is that the repayments will be higher as the principal will need to be paid down in a much shorter time frame, compared to residential loans. When the income for loan repayments predominantly comes from rent, the loan term is usually set within the remaining term of the lease excluding options. In this instance, the repayments are typically assessed on an Interest Only basis with loan terms ranging between 3 to 5 years depending on the tenancy profile.

3. Valuation costs will be passed on to you

Commercial properties have relatively higher valuation fees compared to residential properties which usually need to be paid for up-front by you. Valuation fee quotes are generally obtained from two or three valuation firms. The costs can vary depending on the property. As an example, a valuation report for a commercial property located in a metro CBD location with a value less than a million dollars may cost around $1,500.

4. Interest rates are negotiated case by case

Ever wondered why commercial loan interest rates can be difficult to find online? This is because, unlike regular home or investment loans, the interest rates and fee structures on commercial loans are negotiated on a case-by-case basis. Each lender has a different risk appetite with rates and fees offered to you based on a number of risk factors including your overall financial position, property location, tenancy profile and LVR.

As a rule of thumb, you’ll generally pay a higher interest rate for a commercial loan than a home loan. The key to getting a competitive rate and fee structure is to find a suitable lender and negotiate based on reducing risk factors such as reducing the LVR, which could be achieved by contributing a larger deposit through cash or equity available in other residential or commercial property you own.

5. Specialist commercial lenders can be a great option

Mainstream lenders whilst providing competitive commercial lending products, often have specific qualifying criteria which may not cater for your specific situation.

The second-tier banks and specialist non-bank commercial property lenders can sometimes offer more generous terms and conditions than the traditional bank lenders, including loan terms up to 25 years, a more generous LVR as well as no annual reviews or reporting requirements.

6. Commercial investment property is permitted under Self Managed Super Funds

When it comes to SMSF borrowing, the LVR offered by the banks or lending institutions generally ranges between 60% and 70% of the property value. The repayment structure is usually principal & interest from the outset with repayments calculated over 15 years. Servicing for these loans is typically based on member super contributions and rent paid to the SMSF.

Depending on your circumstances, buying a commercial property through your SMSF can be a great way to grow your wealth and take advantage of considerable tax benefits. There are specific rules and requirements to negotiate, so be sure to seek professional guidance from your financial advisor if you’re considering buying commercial property through your SMSF.

How The Loan Tailor can help you

Commercial lending policies can be complex to navigate and aren’t as black and white as they are in residential lending. So, it pays to have an experienced commercial broker on your side from the get-go.

Whether you’re seeking a better deal on your existing commercial property loan or looking to invest in commercial property and want to know more about your financial options, call Andrew on 0410 731 292.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.