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Lending Structures

All financiers have various options available however in general the following structure would be typical.

Using example 2 from our lending scenarios as a guide with cash provided as equity:

  • Borrowing Requirements $925,000
  • Most lenders will lend 80% of Unit price on some form of concessional interest rate, linked to their home loan policies.
  • With this example they would lend $320,000 on a concessional rate basis with repayments based over a normal home loan term of 30 years. Some financiers will allow interest only on this portion of borrowing.
  • Balance of funding $605,000 would then be placed on a business type loan with repayments based on a monthly principal and interest structure to clear loan over the term of the Management Agreement or 15 years whichever is the lesser.

On this basis loan structure would be as follows:

Loan 1#
$320,000
Loan 2^
$605,000
Total
$925,000

Please note these are examples only, with banks very keen on the business and packages can be tailored to suite your individual needs.

# Interest only &/or Principal & Interest over 30 years.
^ Interest only &/or Principal & Interest based on term of agreement or 15 years whichever is the lesser.

"I can recommend Barry as a very worthwhile person to help you through the minefield of requirements involved with the purchase of a management rights business, his wealth of knowledge both of the industry and local establishments makes him a great business partner."

Mal Butler - Riviere on Golden Beach