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Unsecured Business Loans

Unsecured business loan

 

An unsecured loan is a loan that is not backed by collateral such as property, whether it is land, an investment property, the family home or a commercial property.

 

As an unsecured business loan is not backed by collateral, it represents greater risk to the lender and the rate is typically higher to compensate the lender for the greater risk being assumed.

 

Does your Business have a need for cash flow right now?.  Australian Mortgage Centre can offer a fast, flexible and simple solution for any business requirement. 

 

You may need funds for the below:

 

  • Funds to start new contacts or jobs
  • Debt Consolidation
  • Operation Expenses
  • Marketing & Advertising
  • Renovations
  • General working capital
  • ATO tax arrears ( lending parameters )
  • Opening new sites
  • Purchasing Inventory/EquipmentDo you meet the following?

 

  • Trading for a minimum of 12 months
  • $5,000 per month in revenue

 

We have made it easy to apply with:

 

  • No Application fees
  • Unsecured Loan
  • Approval within 24hours
  • Payments based on cash flow
  • Funding available within 3 days

 

Click here to apply Now unsecured business loans

  • Business loans are between 3-12 months, with the average loan being 6-9 months.Loans range from $5,000 to $250,000 with easy daily/weekly repayments.

 

Second Mortgage Loan

 

Need a second mortgage loan?

 

Second Mortgage refers to a second loan secured under an existing first mortgage upon a piece of property, typically by the home owner. One of the main driving forces that prompt people to take out a second mortgage on their home or commercial security is for debt consolidation or to increase equity funds quickly for investment purposes.

A second mortgage also carries rights to the property however, these are lessor to those of the first registered mortgage. In the process of approving a client for a second mortgage, the lender will calculate the affordability and risk of the first mortgage before calculating whether you would be able to meet any additional repayments on the second mortgage.

2nd mortgage lenders application process for getting a second mortgage is much like the one you go through for your first mortgage finance. The completion of financial paperwork, personal information, a home appraisal, and providing your new mortgage lender with necessary information in regards to your second mortgage loan must all be taken care of.

Second mortgages usually carry a higher interest charge as the first mortgage carries first priority in the case of mortgage default.

There are also fees to be paid as you are essentially obtaining a new loan. These include loan origination fees, appraisal fees, and closing cost related fees. You must also bear in mind that once you get a second mortgage, you will be making two payments on your home every month and not just one. In addition to your first mortgage payment, you will also be making a second mortgage payment every month in an effort to stay on top of your mortgages and avoid defaulting.

Finally, a 2nd mortgage can be structured as a fixed amount to be paid off in a specific time ranging from 3, 6 or 12 month terms.

 

Development Finance Application

 

Development or Commercial Funding is a very profitable and at the same time risky business to finance.

Australian Mortgage Centre first piece of advice for prospective developers is to remember that borrowing for development is very different from borrowing for investment.

Financing property development is a lot riskier for lenders and therefore their requirements are more stringent. If you don’t have much experience in the field, banks may have an issue advancing any funding. Until you get a good reputation or a good track record, you should either bring an experienced person into your development team – such as a project manager or development manager – or use a good mortgage consultant, “because they’re going to understand what the different lenders’ requirements are”.

Every lender also has its own ideas about what constitutes a feasible project. The level of equity required, the profit margins expected and the risks they are willing to take will vary widely. Some lenders draw a distinction between ‘residential’ projects and ‘commercial residential’ projects – the difference lies in the number of units to be built.

The finance submission should start with an executive summary, outlining the broad scope of the proposal and the amount of money required. A thorough feasibility study should come next – but you can’t just punch random figures into an Excel spreadsheet and then massage them until they show the required profit margin. You need to show your working.

To increase your chances of success, the suburb you’re looking to develop in must show strong demand and have good access to infrastructure and transport. Lenders will definitely take these features into account.

Once the lender is satisfied that the numbers look reasonable, the valuers will be sent out to value the Gross realisation value of the development. Unlike the valuation for a simple investment property purchase, the development valuation process is always exhaustive. A professional valuer from the bank’s panel of independent firms will be appointed, and they will certainly uncover any issues that could potentially derail the development project.

The valuer will go through the feasibility study with a fine-toothed comb and ensure that you have included all of your expenses. Even if you’re not planning on selling the project, they will include selling and agents’ costs, just in case you default and the lender needs to liquidate

Finally, even if a development lender does accept your application, unforseen errors could possibly leave you exposed to a cost blow-out or even a mortgagee repossession if these are not mitigated prior.

Private Money Lending

The term Private money  is a commonly used in banking and finance. It refers to lending money to a company or individual by a private individual or organization. While banks are traditional sources of financing for home purchases, and other purposes, private money is offered by individuals or organizations and may have non traditional qualifying guidelines.

There are higher risks associated with private lending for both the lender and borrowers. There is traditionally less “red tape” and regulation to assist towards quicker successful approvals.

Private money can be similar to the prevailing rate of interest or it can be very expensive. When there is a higher risk associated with a particular transaction it is common for a private money lender to charge an interest rate above the going rate.

There are private money lenders in virtually every Australian state , seeking a chance to earn above average rates of return on their money. With that comes the risk that a private money loan may not be re-paid on time or at all without legal action. However, in the case of a real estate private lending the lender can ask for a deed on the property in their name & insurance on the property the same as a bank lending money would require as collateral to help insure they be repaid in the event of a default on the loan or risk to the property.

In that case the lender gets the property and can sell it to recoup their investment. Private money is offered to customers in many cases in which the banks have found the risk to be too high for them to finance the offer.

Principal & Interest loans and Interest Only loans?

Principal & Interest loans and Interest Only loans?

Which one should you choose?

Some of the reasons why you would choose an Interest Only (I/O) loan instead of Principal & Interest.

Why would I choose an Interest Only loan instead of Principal & Interest?

There are actually several reasons why you would want to just pay the interest on your loan rather than paying it down, however different methods are more appropriate for different people and different scenarios. Here are a few of the most common rules regarding how to manage your loan:

Cash Flow & Flexibility

Most people have heard the saying, “cash is king”.

If you have any amount of debt, especially if it is substantial, you want to have the greatest amount of flexibility available to you. In this situation, being locked into constant high repayments can – in rare situations – be a massive burden to you.

Imagine if something went a little bit wrong and you found yourself in a bit of a tight situation for a month or two (let’s say due to sickness or an unexpected large expense) your loan is going to really bite, especially if a reasonable proportion of your loan repayments are going towards paying off the loan as well as looking after the interest. In this situation, if you were to have an interest only loan, you would be able to contact your bank, bring your monthly repayments back to just the interest while you are recovering and then put them back up to whatever you wanted them to once you feel that your cash flow can handle it.

It’s very easy to do, and it gives you the breathing space to manage your affairs a lot better than if you were locked into more restrictive credit contracts.

Interest Only Loan Tax Reason #1

You have multiple reasons for wanting an Interest Only loan when it comes to tax. The first is again down to flexibility and is founded in the very foundation of tax law. The ATO is more interested in what you do with the money that you claim as deductable than where that money is from. So if you have an investment property, the fact that the money was used to buy that property is more important than the fact that you may have used your home as security to buy it. If you only have your home and no other borrowings, this will come into play if you decide to rent your property out in the future.

If you have an investment loan that is receiving Principal & Interest repayments, your debt is obviously going down. The great thing about this is that if you need to get your hands on some money, you’ve been building up a buffer by paying down you debt.

The downside is that if you use any of that buffer to buy something that is not income generating (such as a car, holiday or renovation on your own home) then the interest that you have to pay on the money that pulled out is no longer tax deductable. Why is that? You’ve just borrowed money to buy something that is not income producing. Had you been paying Interest Only on your loans, you could direct all your spare money to an offset account. An offset account is a normal bank account that a bank may give you which is linked to your loan account, but is not part of your loan account.

Every dollar that you put in the offset account is a dollar that the bank will take off your debt when calculating how much interest you have to pay. As an example, if you owed $600,000 and have $200,000 in an offset account, the bank is only going to charge interest on $400,000, even though the loan balance is still actually $600,000. If you wanted to take out some of you savings and like before spend it on something that is not tax deductable (because it does not generate an income) then you’re not actually borrowing any money – you’re taking it out of your bank account.

You’ll be paying more interest since you’ll have less in your offset account, but because you didn’t actually borrow the money, the ATO will deem the nature of the debt to still be for investment and you’ll be able to claim the lot of it as a deduction.

Interest Only Loan Tax Reason #2

The other reason is a matter of efficiency and value. If you are claiming the loan as being deductible, then you can assume that the ATO is effectively subsidising the cost of you debt. Using some basic numbers: $100,000 loan @ 10% = $10,000 interest If the loan was for investment purposes, then the $10,000 interest is tax deductable. If you’re on a marginal tax rate of 40%, when you do your tax return you’ll be entitle to get back $4,000 from the ATO. Therefore, the net amount of interest is: $10,000 – $4,000 (tax return) = $6,000. As a result of this, we can work out our after tax net rate of interest: $6,000 (net interest) on a $100,000 debt = 6% after tax rate of interest.

Using this formula with today’s interest rates, if you’re paying your bank 6.5% interest on your loan, your after tax net rate of interest is actually 3.9%. That is pretty cheap money. Now ask yourself this – if someone lent you money at 3.9% – would you want to pay it back, or would you use what money you had to investment and aim for a higher net return?

Depending on the level of risk you feel comfortable with, the answer might be very clear now as to what is the best thing for you to be doing. A lot of people say you should pay Interest Only your loans because it keeps your tax deductions high. Tax deduction is another word for expense that the Tax Act allows you to claim as an offset to income.

You would want to pay Interest Only on your loan because – after tax – there may be more efficient things you could be doing with the money.

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