Sometimes in business we need cash fast. We need it to grow the business or to see us over the quiet times and the fact is that getting cash quickly from the bank is sometimes near impossible.
That’s when a second mortgage can save the day. It’s a short-term business loan (typically 12-24 months) which can be settled in 7-10 business days and is a popular alternative to refinancing. This article looks at why and when a second mortgage or short-term business loan may be just what you or your client needs.
The fast pace of business growth
We’ve all been there, presented with a business opportunity that you know you can’t refuse, but you also know you don’t have the resource/equipment for it. Perhaps a client of yours has come to you with this exact predicament and they need cash fast.
When you have a client who needs a fast cash injection to cover new machinery or additional staff, refinancing their existing mortgage can be an expensive and slow process. A second mortgage is fast and the total expense on interest is cheaper.
Pay less interest in the long-term
There are two ways in which you can save your client money in the long-term by taking out a second mortgage:
1) You may have secured a competitive rate on their traditional mortgage and by refinancing you stand the chance of losing that rate. Taking out a second mortgage means they can keep their current competitive rate for the long-term loan and still have access to the much-needed cash injection.
2) Although interest rates on a second mortgage are comparatively higher than a traditional mortgage, due to the short term the total interest paid is usually a lot less. i.e. a $1,000 loan at 6% PA interest over a 30 year period would be $1,159 interest paid. A $1,000 loan at 15.95% PA over 2 years would be $319 interest paid.
Better interest rates than an unsecured loan
Second mortgages can be secured against the equity in the current property which means the rates are more competitive than an unsecured loan or credit card.
Competitive rates in Australia
We have competitive rates for second mortgages and caveats in Australia at 15.95% p.a. If you would like to find out more call us on 1300 731 317.