Business Loans at Home Loan Interest Rates

Ever wished you could obtain your business loan at the same interest rate as your home loan?

Home loans usually have interest rates one to three per cent lower than commercial loans. It is now possible to get a business loan at the same interest rate as a home loan!

Historically banks have been very particular about the purpose of loans. Home loans must be for residential properties and businesses must go down the track of commercial loans. In recent times some banks have taken a more relaxed view and allow a business loan to be financed at a home loan interest rate.

Borrowers who have substantial equity in a residential property can “tap into” this money and obtain a loan for a business purpose at a home loan interest rate. The purpose of the loan can vary; it can be for the purchase of a commercial property, expansion of a business or even in some instances fund an ATO debt. The banks will lend up to eighty per cent of the entire value of the residential property held as security. This loan can be for a combination of residential and commercial uses.

Commercial loans generally need to be repaid within 10-15 years. Home loans however, are often spread over 30 years. From a cash flow perspective, the longer the loan the lower the repayments, therefore less impact on available funds. Interest only periods are also available which again can help lessen the drain on cash. Tax benefits can be obtained when a loan is structured this way.

The down side to all of this is that you will increase the exposure against your residential property.

An experienced and knowledgeable mortgage broker can help you make the decision of whether this type of loan is right for you.

If you’re either an existing business owner or looking to start a business, give Grant or Mark a call. They have the expertise to make sure you get the most competitive loan that matches both your business and personal circumstances and goals.