All Topics / Help Needed! / Using IP’s for a Business loan?

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  • Profile photo of waynel2waynel2
    Member
    @waynel2
    Join Date: 2004
    Post Count: 311
    February 9, 2005 - 3:33 am

    Hi Guys,

    After getting a little sick of the 9-5 working cycle I’ve been weighing up ways I can get the finance to start up my own business. I’m looking at starting a charter business in WA though I need at least $150k to get it off the ground.

    Does anyone know much about business loans? I was hoping to use the equity in my 2 IPs to get a business loan.

    My IP’s are worth approx $465k in total and I owe $335k. This leaves me equity of around $130k…which I guess isn’t quite enough!

    I was going to talk to a broker though before I do I thought I would see if anyone else knows much about business loans…

    Thanks for your help!

    Wayne

    Wayne Leech

    *Below are links to my websites – any feedback, comments would be appreciated:)
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    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 9, 2005 - 4:27 am

    Hi Wayne

    Banks get a bit scared when people want money to start up a business – probably because a high percentage fail. They also charge a higher interest rate.

    A better way maybe to apply to increase your loan for investment purposes.

    But you figures are not entirely correct. With LMI, you could increase your loans to 90% of values – if you service. $465,000 x 90% = $418,500. Available money would be this less current loans which will equal only $83,000.

    If you are starting a charter business you may be able to lease boats and some other equipment.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of waynel2waynel2
    Member
    @waynel2
    Join Date: 2004
    Post Count: 311
    February 9, 2005 - 4:55 am

    Thanks Terry,

    Yes, I had thought of redrawing on my mortgage though as you’ve mentioned the equity just isn’t enough…

    So in regards to getting a straight business loan do you think I would be unsuccessful? When you say they charge higher interest rates – how much higher?

    I guess I could always wait until the equity has increased enough in my 2 IPs – though that could take years!

    It’s funny really – if I only had my first IP (valued at $210k and owe $115k) then I would have more equity than owning two properties!

    Maybe I look at selling the second IP to pay off and increase the equity in the first IP… though i guess this defeats the purpose of property investing!:)

    Cheers

    Wayne

    Wayne Leech

    *Below are links to my websites – any feedback, comments would be appreciated:)
    http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
    http://www.homesearcher.com.au – List your property for FREE (Private sellers only)

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