Author Archives: AMC

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.

Minimising your mortgage

Bid Home LoansFor most of us, paying off a home loan as quickly as possible is the smartest strategy to get ahead financially.

Structuring your home loan more efficiently can help you reduce your loan balance substantially and pay off your loan faster. Mortgage minimisation is based on good planning and tight budgeting.

Increase your loan repayments

It might seem obvious, but the best way to reduce your mortgage is to simply increase your repayments. The simplest and most effective way to do this is to increase your regular repayment amount.

Some other strategies to consider are:

• Paying fortnightly instead of monthly. There are 26 fortnights in a year but only 12 months, so by dividing your set monthly repayment in two and paying it fortnightly, you will be making one additional month’s mortgage repayment each year.

• Making extra repayments whenever you can.

• Keeping your repayments the same if interest rates drop at any time.

• Next time you get a pay rise, put 50% of it towards upping your loan repayments.

Get the right home loan

Making sure that you have the right loan to suit your individual situation is important, and your Australian Mortgage Centre Broker will help you choose a loan that you are likely to be able to pay off faster.

There are many loan products that offer flexibility – for example professional packs, line of credit loans, or standard variable loans with a redraw facility, or an offset account.

Make every cent work

100 per cent offset accounts enable you to have every cent of your money working to reduce your mortgage rather than sitting idly in your cheque or savings account. Line of credit loans can achieve the same result but can be more difficult to manage as they are like giant credit cards and require great budgetary discipline from you for them to work effectively.

Consolidate your debts

You can make significant savings in interest by consolidating all your loans – personal, car and credit cards – under your home loan, where the interest is usually at a much lower rate.

Remember, however, that putting short-term consumables under long-term finance can prove expensive in the long run.

House or Unit

Houses or units: which is more profitable?

House or UnitShould you invest your hard-earned cash in house on a quarter acre block, or a low-maintenance apartment in the city?

It’s the age-old question that plagues property investors across the nation, and as is often the case when it comes to real estate, there is no clear-cut answer.

When buyers look at a property for themselves the majority tend to go for houses, mainly due to the development potential. A decent block in a growth area then there is the possibility of developing the site –even if only to the point of a dual occupancy – and increasing the yield.

However, this is not necessarily a blanket strategy that applies to all investors. The long-held argument for houses over units has been largely drawn from the belief that “the value is in the land”, as land appreciates and buildings deprecate, and therefore houses are always the premium option.

When trying to decide between houses or units, you should evaluate your options based on “the quality factor”. This means investing in the best quality property you can afford within your budget – regardless of whether its strata titled or standalone.

In regards to units, you need to pick quality developments in quality areas with a good agent, as this provides a desirable property to tenants. This translates to maximised rental returns and minimal vacancy rates, which maximises your income.

[box type=”shadow”]Top three tips for a profitable property investment:

  • Structure in routine maintenance. If you keep your property, whether it’s a house or unit, in good repair, you increase the property’s overall profitability.

 

  • Engage an A-list property manager. If you have an agent who is diligent and takes care of the property, and who doesn’t keep changing the method of rental payment, you will have happy tenants and therefore a lower vacancy rate.

 

  • Review rents regularly. A good agent will help you make sure you are charging the market rent, instead of too much or too little.

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Fixed or Variable Home Loans

Fixed or Variable Loans – Which One to Choose?

Fixed or Variable Home LoansDo you apply for a variable rate or a fixed rate loan – perhaps both…?

The toughest loan decision of all: whether to lock in an interest rate. A fixed rate gives you security, but a variable rate can add to your flexibility and cut your costs.

As you begin looking for a home loan, you’ll come across two main types of loans: fixed and variable. Which one you choose depends on your finances, the features you need in a loan, how long you plan to own the property and whether you believe interest rates will rise or fall. The good news is that as competition has intensified, the gap between fixed and variable rates has all but disappeared.

A fixed rate home loan is taken out for a set period with a set interest rate; when this period ends you can fix the rate again, or switch to a variable interest rate which fluctuates with the market.

Variable and fixed rate loans are more or less appropriate in different financial environments, and for different types of lender.


Fixed or Variable Loans – Which One to Choose?


Fixed Home Loan Products

With fixed interest loans, the rate is set for a specific period – usually 1 to 5 years. At the end of that time, the loan reverts to a variable rate or you can renegotiate a further fixed term. By locking in your home loan, you are protected against rising interest rates. And your monthly repayments remain the same throughout the fixed-interest period.

On the down side, fixed loans have fewer features than variable loans, are expensive to break and can attract a slightly higher interest rate.

[box type=”shadow”]Ask yourself:

  • Do you need predictable repayments?
  • Do you anticipate any major changes to your family arrangements, job or business?
  • Do you believe rates will rise in the near future?
  • Are you buying an investment or owner-occupier property?
  • If you answered yes to most or all of these questions, a fixed rate loan may suit.

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Fact: Fixed rate loans offer security and predictable repayments. But beware: breaking the loan early can cost thousands in what lenders describe as economic breakout cost fee.

Standard Variable Home Loan Product

Most standard variable loans feature accelerated repayment options, offset, redraw, split loan capacity, variable repayment schedules and portability. If you don’t plan to use most of these features, you are paying for window dressing and may be better off with a basic or fixed loan.

[box type=”shadow”]Disadvantages:

  • Rates can rise or fall at any stage
  • Very sensitive to economic conditions
  • Picking the next move in interest rates is very difficult


Advantages:

  • Very flexible
  • The most popular form of loan
  • Competition between banks is intense so the spread of rates is small
  • Big savings when rates low


Decide what’s important to you:

  • Redraw facility
  • Extra repayments
  • Portability
  • Flexible payments
  • All-in-one facility
  • Split loan option
  • Offset account
  • Loyalty discount
  • Top-up

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Let the Australian Mortgage Centre find you the right Loan to suit your needs.

 

Article Source: Homeloans