Are you a property owner with a business? Your mortgage broker can help you with commercial and asset finance too.
One of the basic tenets of work/life balance is: ‘Don’t bring your work home with you.’ But what if you could bring your home to work? It’s a scenario that home owners with a business should consider when seeking commercial or asset finance.
Three common types of business finance are:
Business loan: the lender loans money to the business for its operations and the business repays the lender with interest.
Commercial investment: the lender loans money to the business to invest in an asset, including real estate. The asset is often used as security and the repayments attract interest.
Chattel mortgage or equipment loan: the lender loans money to the business to purchase equipment or vehicles, which are used as security. Repayments attract interest.
When it comes to purchasing an asset, lenders will often use the asset as security against the business’ debt. In some cases, however, such as with the purchase of equipment or vehicles w here the assets may depreciate over time, the asset itself may not be sufficient security. In other cases, for instance when a business seeks a loan for operational needs, there may be no security.
Sometimes the more security you can offer a lender, the lower the interest rate it will charge and vice versa. Unsecured loans often attract the highest interest rates. If you’re a home owner with equity in your property, you may be able to use this equity as security to leverage a better rate on your business loan.
As with mortgage rates, commercial and asset finance rates w ill vary from business to business. Lenders w ill look at things such as industry volatility, how long you’ve been in business and your financial records to determine the risk factors that will contribute to their loan terms. Your mortgage broker can offer an unbiased view on whether your property is suitable to be used as security, how much equity you can use and how this might affect different loans from different lenders.
Brokers aren’t just for home mortgages. Don’t leave business growth until the future – explore how commercial and asset finance can work for you today.
Author: Alan Faint, http://www.hfcahobart.com.au/