equity to purchase business

Hi there, I am no mortgage broker, but there are some good ones on this site who I am sure will comment soon.

I will offer some comments as I have just done this myself.

The main factor will be the type of business. By this I mean either a freehold where you are purchasing the business and the property/building where the business is located, or whether it is just a lease, where you are puchasing the business only and you will be paying rent to a landlord.
If it is a freehold, depending on the property type and location, you may very well be able to borrow upto 70% of the value of the property. Some lenders will not lend for leases only at all.

Another issue will be the figures for the business you can show the lender. This varies from lender to lender. Some will get very nosy and want to see good solid figures for upto 2 years, some 6 months, and some you may be able to get away with just saying the money is for investing.

So, for freehold, you may be able to borrow up to 70% of the property, then you will still have the cost of the business on top. For purely a lease, you may get upto 45%. You can get more than 45% but it will cost you in terms of interest rates.

Basically, I have found it to be a major drama convincing anyone to lend me the cash for a leasehold business. Especially since the current owners did not keep very good records.

You may very well find that your 140K will get you a 140K business (forgetting other costs to keep things simple) – which really bites the big one, since that 140K would buy you a lot of real estate.

Feel free to PM me if you have any specific questions. Remember, I am not a mortgage broker, just someone who has just gone through what you are looking at doing. It was painful, but I got there eventually. I will be glad to offer any assistance I can.

Dan

HHH

You should be able to borrow 80% of the value of the property to use for whatever purposes you wish.

Cheers,

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.