I am writing in hopes someone can give me some advice for my situation.
I have formed a company with two other people.
This company has an income of $600.00 a week with no expenses yet.
We are looking to source a 100% loan for an investment property worth $272,000.
We would like the loan to be under the company’s name, with our combined salaries as the Guarantor for the loan. We also have ‘some’ equity on our properties that we can also leverage but prefer not to.
Our combined annual salary would be approx $150k-180k, plus the $30k that is currently incoming in the company.
Can anyone forsee a problem why we shouldnt be able to get a loan?
Are there any problems with purchasing IP’s as a company that I should be aware of?Any advise would be appreciated
SMooTH by name…
SMooTH by reputation…You probably should be using a trust structure. Have you had good advice?
Anyway, there will not be a problem getting a loan in the company name and using the directors as guarrantors. But you will not be able to get a 100% loan wihtout using your equity. 95% would be possible, depending on the location etc.
It would be wise to use a redraw on you existing equity (for deposits) rather than cross collateralising.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for your reply Terry.
Thus far I am in early stages of my research.
What is it that makes 100% finance impossible for a situation such as this?Does it make a difference if I metnion we are looking in the INTEREST ONLY loan direction?
Look forward to reading further posts.
SMooTH by name…
SMooTH by reputation…Hi Rob.
I was hoping you might find your way to my Forum topic, as I have been reading through a few of the other posts, and found your advice to be very interesting ( and taken note of your email address ).
This IP is the first investment property for the newly formed company. We can acquire enough finances between the 3 of us to cover the Stamp duty and fee’s, but not to cover a deposit.
We will be using a 90 day bond as a deposit on a property, with hopes to secure a 100% Interest Only loan.
We are not concerned with sourcing the loan from Australia or oversea’s.
Although I am still learning ( quite new to this all ) I appreciate your advice and will run it by my fellow directors
At present I’m under the impression that we have a Mortgage broker looking into what our options are as of today ( 20.05.2004 ) but we’ll see what he comes back with.
Wait until I tell you the time constraints I’m working with. ( Right now my role is to research what I can ), but we have already made an offer on a property ( yesterday ) and it has been accepted – wasn’t a planned thing, it just seemed to happen that way.
There is a clause regarding ‘ Pending loan approval from nominated lender ‘ on the contract, so we have 90 days to sort out these little issues.
Thanks for your response, and if you have anything further to add, look forward to reading it.
If things don’t work out with the current Mortgage Broker, perhaps we’ll be in contact with you.
Kind Regards
ME!SMooTH by name…
SMooTH by reputation…Thanks again Rob.
I will definately post additional information as we move along, and as new information comes to me.
I’m actually feeling a little better ( relived ) knowing that someone ( more educated that myself ) is confident that we will be able to acquire the loan, and that we are in a semi-possible situation rather than up S**T creek without a paddle.
I will put this advice to my fellow directors and like I said, you may be hearing from us for your services and advice for future purchases.
Post again soon.
All the best.
ME!SMooTH by name…
SMooTH by reputation…Rob
As a fellow mortgage advisor, could you point me in the right direction on a few things.[specs]
Are you saying that you can get a 100% loan for a company wihtout additional security? I am aware of the 100% loans out there, but all these must be for personal names not companies. Could you please let me know who it is (via PM) so I can add them to my list of lenders (currently 23!).
Also how are you able to get loans in company names without personal guarrantees? Even if they have been trading for more than 2 years?[eh]
Tom Murphy
Mortgage Adviser
If I can’t do your loan no one can.Rob
Thanks for the reply.
One of my hobby is cooking, would you like to come over for dinner one night? (I promise to dress up!)[jerry]
Tom Murphy
Mortgage Adviser
If I can’t do your loan, Rob can.>>I would recommend a Line Of Credit if you do decide to use your equity.<<
That isn’t very good advice you got there, Smooth. An offset account is infinitely better than a line of credit.
The main reason is that there could be tax complications with a Line of Credit account which can be avoided by having an offset account instead.
These detrimental situations arise when one deposits one’s wages into a Line of Credit account and one subsequently wants to draw some money out again for personal use.
Pisces
Tom,
You be careful in the kitchen, didn’t you hear what happened to Jamie the Naked Chef with his todger?? [crying]
hee hee hee
Liz Wilson
Mortgage Lender
Hi Pisces.
Thank you for your input, I will take it into consideration along with everyone elses suggestions.
It all just gives me more options to research and investigate, so it’s all appreciated.
SMooTH by name…
SMooTH by reputation…I am unaware of any 100% loans available in company names, but if Rob has one then they must be available. Sometimes these may still not be ideal if they have high interest rates and/or fees.
Smooth. It sounds like your company is already trading. If so, you should not be buying a property in this company for asset protection reasons. Please talk to an advisor. I love trusts, but they may not be suitable in your case so get some advice.
Also with redrawing the equity, it doesn’t really matter how you get at it, whether thru a redraw or LOC, but generally LOCs have a higher interest rate. (ANZ and Macquarie have cheaper ones).
If not able to get a 100% loan, then one good way to fo it is to draw on your equity and to use this as deposits for this (and future) property. This keeps them all stand alone and not cross secuitised and will help if you plan to purchase many more.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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