FAQ
Residential
Maintaining a good credit score is crucial as it indicates to lenders your likelihood of repaying your debt. A good credit score can impact the amount of money a lender is willing to lend and the interest rate they offer you.
You can obtain one free credit report for yourself per year through websites such as Equifax, Finder and GetCreditScore.
Please see the below guide for credit score rankings (guide only):
- Excellent: 833 – 1,200
- Very good: 726 – 832
- Good: 622 – 725
- Average: 510 – 621
- Weak: 0 – 509
Ideally, you would like your credit score to be as close to 1000 as possible.
Some things that you can do to improve your credit score include lowering your credit card limits, paying your existing debt repayments (including bills and rent) in full and on time, pay off any debts in full where possible and limit your credit enquiries (eg. many loan pre-approvals can lower your overall credit score).
Stamp duty or transfer duty as it’s sometimes known, is a tax charged for property purchases by each Australian state and territory. Costs can vary state to state. Your conveyancer or solicitor will arrange to pay stamp duty on your behalf to the relevant state or territory revenue body.
You can calculate stamp duty via this link.
You may have heard about the changes to the NSW property tax system, which will give first home buyers the choice between paying an annual property tax or stamp duty. Want to know more? Ask us!
Alternatively, you can find some information on the First Home Buyer Choice proposed scheme here.
Yes, a lender can require any structure built on your block of land to be insured against loss. The insurance will ensure that a similar structure can be rebuilt should a catastrophic event occur. Strata titled properties have their insurance provided in their strata levies – you can contact your strata manager for a copy of this. Otherwise you will need to insure for either full replacement cost as determined by the lender’s valuer or an amount that you are comfortable with.
If you need help with calculating a replacement amount try this great calculator.
As many of us know, buying where you can afford does not always equate to buying in an area you love. Even the worst house on the best street can be way out of budget these days. So, how can you enter the property market to become a homeowner AND live where you really want to live? It’s simple really: rent where you love while investing where you can afford. This term is sometimes known as “Rentvesting”.
Though often overlooked as an option, no rule says you need to own your principal place of residence to invest in property. In fact, it’s a really effective double play with many financial benefits of property ownership without sacrificing your lifestyle. Want to know more about these benefits? Ask us!
The best way is to negotiate a 5% exchange deposit. If that proves to not be possible you can purchase a deposit bond which will act instead of the 10% cash. Our process for obtaining a bond is very simple and you can read more about deposit bonds here.
It sounds like an easy question to answer, right? In reality it depends on a great many variables ; Income (obviously!) and how much you have saved are the two key headline numbers. However, there are many other factors that may limit or cap how much you can borrow, such as the type of property you are looking at (studio apartments have limitations, for example) or the postcode that you are considering buying into (some lenders limit loan sizes in certain areas).
The best answer is to book an appointment and allow us to get all the information that we need to give you the very best advice on not only “how much can I borrow” but also “how to best to structure a loan” for maximum benefit to you.
If you are applying for a fixed interest rate loan, many lenders allow you lock in the rate advertised on the day rather than accept the rate offered on settlement day (which is the default). The cost for this varies from lender to lender – from $0 to 0.15% of the loan amount. Rate lock is always a consideration but especially in an environment of increasing interest rates.
Once we have your pre-approval, it will be valid for 90 days with most lenders. There are a few exceptions to this, with some lenders offering longer periods of time before expiration, however 90 days is the gold standard.
LMI is a way to obtain a home loan, without having saved the commonly required 20% deposit beforehand. What this means is lenders are able to pass on the risk to a mortgage insurer, which enables the lender to offer a higher loan amount but with less of a deposit, sometimes as low as 5%. The cost of LMI essentially is added to your required loan amount and paid off over time.
In some circumstances the LMI can be waived, such as under the First Home Guarantee or for certain professions, so make sure that you ask about these.
The short answer is – yes. A solicitor/conveyancer has a number of roles to play in the buying process.
You should contact a solicitor early in the process, when you have received a pre-approval for a home loan from a lending institution.
When you find a property, your solicitor will help you check the Contract of Sale. They will then do a title search on the land and property and a local government search. It is their job to alert you to anything in these searches, that may affect your decision to purchase the property.
After a contract has been signed, the settlement period begins. During this period, a number of key events will occur that are driven by your solicitor. These include preparing the Transfer of Land document, arranging a settlement date and advising you on the amount of funds you are required to provide at settlement.
Commercial
Business Loan
How much you can borrow depends on the lender, the business loan product they offer and how your application is assessed. When you approach Ledge, we look at a number of things, including your working capital position and projected cash flow of the business. This enables a clear assessment of how much you need to borrow and what lenders will be best suited to you. Speak to your Grokfin Executive to apply for a business loan today.
The difference between a secured and unsecured business loan is that a secured business loan is simply secured by using a piece of collateral, such as a vehicle or property, and is used as a guarantee for the lender. Conversely, an unsecured business loan does not require collateral.
Yes, you can get a business loan with no deposit
Business loan interest rates are constantly changing and vary between business loan providers, the loan amount and the type of loan you require. When you partner with Grokfin, we compare business loans and provide you with the options, so you get all the information and the final say in the option you choose.
Equipment Finance
A chattel mortgage is a commercial finance product that provides funds for businesses to purchase an asset. The business owns the car or equipment, with the asset used as the security for the loan.
Unlike a hire purchase or an operating lease, a chattel mortgage gives businesses ownership of the asset straight away, allowing them to pay off the loan using the income generated from the asset.
Yes, most 2nd hand equipment is able to be financed, however, the age and class of the equipment may impact the term and structure of the loan and, in some very rare cases, preclude funding.
Yes, private sale equipment can be financed and it’s vitally important that various aspects are covered to ensure that you are protected.
For instance, we liaise directly with the party selling the equipment, seeking proof of ownership in order to satisfy ‘title flow’.
We also check for any existing finance against the equipment – making sure this is paid out at settlement. Additionally, a PPSR check is conducted to ensure that any encumbrances that may exist are removed.
Yes, payment terms are usually monthly in arrears, however they can be restructured to better suit your cash flow. For example, businesses in agriculture and other seasonal based industries, are paid annually, so their repayment period can be structured to suit.
In most cases, we can finance the GST inclusive price and you can pay the GST as a lump sum when you receive the benefit via your monthly or quarterly BAS.
Construction funding is possible in certain circumstances and allows for “progress payments” during the construction phase (similar to a new home build), which can then be converted to an equipment loan once the construction of the equipment is complete. This preserves your cash flow, which is vital, given that the equipment isn’t income producing until delivered.
Yes, we are able to fund up to 100% of the cost or the total cost of the equipment – it’s entirely up to you and your situation.
The contract terms are flexible and generally range from 2-5 years with a balloon / residual payment if required. In rare cases, loans can be extended to 7 years and sometimes up to a maximum of 10 years, dependent upon the type and class of asset.
Security for equipment is generally standalone against the equipment itself as well as directors guarantees. No other collateral security or General Security Agreement (GSA) is required.
Once we have received everything required, the pre-qualification process of most transactions is completed within 1- 2 business days. On approval, we will then issue the final documentation inhouse and when the equipment is ready for delivery and we have signed documents to hand and all settlement conditions have been met, we can settle with the supplier.
At Grokfin, we pride ourselves on building strong relationships with our clients to better understand their business. We have developed strong relationships with most banks and financiers, which gives us access to competitive pricing and T&C’s that clients may not be able to access directly. We know which lenders to approach for particular transactions and we have the knowledge and experience in putting proposals to lenders in a format that is easier for them to assess.
Quite simply, financing your plant and equipment conserves your cash for use elsewhere in your business or as an additional working capital buffer.
Cash flow finance
Cash flow finance is a type of funding that helps businesses improve their cash flow by using their accounts receivable, inventory or other assets as collateral to obtain short-term loans.
Cash flow finance works by allowing businesses to access funds based on the value of their assets. For example, a business may use its accounts receivable as collateral to secure a loan, which it then pays back over a set period of time with interest.
There are several types of cash flow finance available in Australia, including invoice financing, factoring, inventory financing, and purchase order financing.
Cash flow finance can be beneficial for businesses of all sizes, particularly those that have seasonal fluctuations in revenue or that experience cash flow problems due to slow-paying customers.
The main advantage of cash flow finance is that it can help businesses improve their cash flow without having to wait for customers to pay their invoices. This can help businesses meet their financial obligations and take advantage of growth opportunities.
The main drawback of cash flow finance is that it can be more expensive than other forms of funding, such as traditional bank loans. Additionally, businesses may be required to provide detailed information about their financials and assets in order to secure financing.
The best way to determine if cash flow finance is right for your business is to consult with a financial advisor or business broker who can help you evaluate your options and determine which type of financing is best suited to your specific needs.
To apply for cash flow finance, businesses typically need to provide detailed financial information, including cash flow projections, accounts receivable and inventory data, and other relevant documentation. It’s important to work with a reputable lender or financial institution that can help guide you through the application process.
The time it takes to obtain cash flow finance can vary depending on the type of financing and the lender. Some lenders may be able to provide funding within a few days, while others may take several weeks to process applications and approve funding.
When selecting a cash flow finance provider, it’s important to look for a reputable lender with a track record of providing flexible financing options and excellent customer service. You should also consider the interest rates and fees associated with the financing, as well as any other terms and conditions that may impact your ability to repay the loan.
Line of Credit (Business Financing)
Business finance, or corporate finance, is reviewing a business’ cash flow forecast, seeing where additional resources may be required and sourcing the correct equity or debt solution in line with the business finance needs.
The potential advantages of business finance include:
- A quick way to raise cash for your business
- Build and establish business credit
- There may be tax deductions
- Debt can fuel business growth
The potential disadvantages of business finance include:
- A bank loan may require an initial set-up fee
- There may only be high interest rates available for your requirements
- The loan needs to be paid back with interest
- You need to apply for a business loan and are not guaranteed approval
Property Finance
If you are purchasing a residential or commercial property and can’t pay for it with cash, property finance can help. Getting a property loan from a bank/lender allows you to borrow the money required to pay for the property. You then make repayments to the lender, plus interest, to pay off the loan over a certain period. How much you can borrow is dependent on the lender and your circumstances. To find out more, speak to a Grokfin Executive.
The amount you can borrow and the terms of the property finance loan will vary depending on the lender and the individual circumstances of the borrower. In general, however, loans are available for up to 80% of the property’s value for residential and 70% for commercial. There can be situations where banks will lend higher than these ratios and can even fund 100% of the property value. Repayment periods can range from 5 to 30 years and provide an interest-only period. Contact Grokfin for more information on your particular circumstances.
The best finance option to buy a property depends on your circumstances and the amount you can borrow. You should speak to one of our Grokfin Executives, who will be able to guide you on the best options available to you.
The amount of deposit you will need for property finance will depend on the type of property and value and the loan structure and terms. Generally, you will need a minimum deposit of 20% for residential and 30% for commercial properties.
It is also worth noting that many lenders may charge higher interest rates for loans with a loan-to-value ratio of more than 80%. So, if you can only put down a smaller deposit, you may end up paying more in interest over the life of the loan.
Repayments on a property loan will depend on the amount of the loan, the interest rate, and the term of the loan. In general, you will need to make repayments monthly on a principle and interest basis; however, there is often an interest-only period available if this is preferred
However, some lenders may offer different repayment options, such as weekly or fortnightly repayments. You should speak to your lender about the different repayment options available and compare them to see which would suit you best.
Commercial property loans typically require a deposit of at least 30% of the purchase price. However, some lenders may require a higher deposit depending on the type of property and the loan amount. In certain circumstances and with the appropriate loan structure, some banks can provide 100% funding for commercial properties. For more information, contact us today.
The interest rate on a commercial property loan is usually higher than on a residential mortgage as commercial properties are considered higher risk by lenders. However, interest rates will vary depending on the lender, the loan amount and the term of the loan. Therefore, you should compare interest rates from several lenders before deciding which one to use.
A commercial mortgage broker can help you secure the best loan possible. They have relationships with a number of different lenders and can help you find the one that is the best fit for your needs. They will also work with you to get the best terms possible. Get in touch with a Grokfin Executive to learn more about how we can help you secure a commercial property loan.
You may be charged a number of fees from banks, solicitors, settlement agents and valuers when taking out a property loan. These include application fees, valuation fees, and settlement costs. Your Grokfin Executive will ensure you are aware of any fees that may apply to your loan.
Yes, you can get a pre-approval for a commercial property loan which will give you an idea of how much money you can borrow and the repayment terms. However, it is important to remember that pre-approval is not a guarantee you will be approved for the loan.
Invoice Financing
Invoice financing is a type of funding that allows businesses to borrow money against their outstanding invoices. Essentially, the financing company buys the unpaid invoices from the business and provides them with a cash advance.
When a business needs cash, they can sell their unpaid invoices to a financing company, also known as a factor. The factor will typically advance the business a percentage of the invoice value, such as 80-90%, and will then collect payment from the customer directly. Once the customer pays the invoice, the factor will then pay the business the remaining balance, minus their fees.
Invoice financing can be used by any business that issues invoices to customers with payment terms of 30, 60, or 90 days. It is particularly useful for small and medium-sized businesses that have cash flow constraints and need to access cash quickly.
The benefits of invoice financing include:
- Quick access to cash: Invoice financing allows businesses to get cash quickly without waiting for customers to pay their invoices.
- Improved cash flow: By selling their invoices, businesses can improve their cash flow and have more money to invest in their operations.
- No collateral required: Invoice financing is an unsecured form of funding, which means businesses don’t need to put up collateral to secure the loan.
- Flexible terms: Invoice financing can be used on an as-needed basis, and the terms can be adjusted based on the business’s cash flow needs.
The fees associated with invoice financing can vary depending on the factor and the specific terms of the agreement. Typically, factors will charge a discount fee, which is a percentage of the invoice value, and a processing fee. The discount fee can range from 1-5% of the invoice value, and the processing fee can range from $50 to $500 per invoice.
Yes, invoice financing and factoring are often used interchangeably to describe the same financing method. However, some factors may offer additional services beyond invoice financing, such as credit checks, collections, and accounts receivable management.
If a customer doesn’t pay their invoice, the financing company may require the business to repurchase the invoice or may deduct the unpaid amount from the advance they provided. To mitigate this risk, factors will typically perform credit checks on the customers before buying the invoices and will only work with customers that have a good payment history.
No, invoice financing may not be the right funding solution for every business. It is best suited for businesses that have a high volume of invoices and need to improve their cash flow quickly. Businesses that have a low volume of invoices or customers that pay promptly may not benefit from invoice financing. It’s important to evaluate your business’s needs and financial situation before deciding on any financing solution
Lease Financing
Lease financing, also known as equipment leasing, is a type of financing that allows businesses to rent equipment or machinery rather than purchasing it outright. The business pays regular lease payments for the use of the equipment over a set period of time.
With lease financing, the business will work with a leasing company or finance provider to lease equipment or machinery. The leasing company will purchase the equipment and lease it to the business for a set period of time, typically 2-5 years. The business will make regular lease payments during this time and will have the option to purchase the equipment at the end of the lease term for a predetermined price.
The benefits of lease financing include:
- Lower upfront costs: With lease financing, businesses don’t need to pay for the full cost of the equipment upfront. Instead, they make regular lease payments over time.
- Cash flow management: Lease financing can help businesses manage their cash flow by spreading out the cost of the equipment over time.
- Tax benefits: Lease payments are typically tax-deductible as a business expense, which can provide tax benefits for the business.
- Upgraded equipment: At the end of the lease term, businesses can often upgrade to newer equipment without having to purchase it outright.
- Preservation of credit lines: Lease financing allows businesses to preserve their credit lines for other business expenses and opportunities.
Almost any type of equipment can be leased, including machinery, vehicles, office equipment, and technology equipment.
The fees associated with lease financing can vary depending on the leasing company and the specific terms of the agreement. Typically, leasing companies will charge a monthly lease payment, which includes interest and any other fees associated with the lease. Other fees may include an application fee, documentation fee, and end-of-lease fee.
At the end of the lease term, the business will have the option to purchase the equipment for a predetermined price, continue leasing the equipment, or return the equipment to the leasing company.
No, lease financing is not the same as a loan. With a loan, the business borrows money to purchase the equipment outright and pays the loan back over time. With lease financing, the business leases the equipment and makes regular payments over time.
No, lease financing may not be the right financing solution for every business. It is best suited for businesses that need to acquire equipment or machinery but don’t have the upfront capital to purchase it outright. Businesses that need equipment for a short period of time may also benefit from lease financing. It’s important to evaluate your business’s needs and financial situation before deciding on any financing solution.
Trade Finance
Trade finance for a commercial brokerage firm is a type of financial service that provides funding and support for businesses involved in international trade. As a commercial brokerage firm, you can use trade finance to help your clients manage the risks and complexities involved in international trade, including payment, currency exchange, and political risk.
The types of trade finance services that your commercial brokerage firm can offer include:
- Letters of credit: Your firm can help your clients to obtain letters of credit from banks to guarantee payment for their international trade transactions.
- Trade credit insurance: Your firm can offer trade credit insurance to protect your clients against non-payment by their customers due to commercial or political reasons.
- Export factoring: Your firm can help your clients to obtain export factoring services, in which their invoices are sold to a factoring company in exchange for immediate payment.
- Supply chain financing: Your firm can help your clients to access supply chain financing to provide funding to businesses throughout the supply chain, from suppliers to buyers.
The types of trade finance services that your commercial brokerage firm can offer include:
- Letters of credit: Your firm can help your clients to obtain letters of credit from banks to guarantee payment for their international trade transactions.
- Trade credit insurance: Your firm can offer trade credit insurance to protect your clients against non-payment by their customers due to commercial or political reasons.
- Export factoring: Your firm can help your clients to obtain export factoring services, in which their invoices are sold to a factoring company in exchange for immediate payment.
- Supply chain financing: Your firm can help your clients to access supply chain financing to provide funding to businesses throughout the supply chain, from suppliers to buyers.
Your commercial brokerage firm can work with trade finance providers by establishing relationships with banks, financial institutions, and specialized trade finance providers. You can also work with trade finance brokers to find the best financing options for your clients.
The risks associated with trade finance for a commercial brokerage firm include credit risk, operational risk, legal and regulatory risk, and reputation risk.
Your commercial brokerage firm can manage the risks associated with trade finance by:
- Conducting thorough due diligence on clients and trade finance providers.
- Ensuring that all transactions comply with relevant laws and regulations.
- Maintaining strong internal controls and risk management processes.
- Diversifying your portfolio of trade finance clients and providers.
Your commercial brokerage firm can promote trade finance services to clients by:
- Educating them about the benefits of trade finance.
- Highlighting case studies and success stories of businesses that have used trade finance.
- Providing guidance and support throughout the trade finance process.
- Offering competitive pricing and terms.
Your commercial brokerage firm can ensure that trade finance services are delivered efficiently and effectively by:
- Investing in technology and systems to streamline processes and improve communication with clients and trade finance providers.
- Developing a team of experienced and knowledgeable trade finance professionals.
- Monitoring and measuring performance to identify areas for improvement.
