If you’re still using your branch as your go to point for your business lending, apart from missing out when things turn tough, you’ll also be missing out on the advantages from lender competition for business from small to medium business owners. What business owners don’t immediately realise is that this can also save them thousands on their home loan.
A good example of this is a product that’s known to every business owner, the business overdraft.
Traditionally a business overdraft is tied to the family home. It’s a way that a major lender also ensures home loan loyalty from a customer (most home loan lenders outside of the big four don’t offer overdraft facilities). Rather than receiving discounted rates for having more than one loan with a lender, business owners will usually find themselves the victim of what we call “rate creep.” Over time and at regular intervals the business owner might not recognise their rates going up on a regular basis, even if the rest of the lending market is trending down. A good example of this was a Transport broker business we saw recently with home and investment rates above 4.5%, when appropriate alternatives have rates in the low 3s. With $1M of lending set at a rate that’s nearly 2% higher than it should be, that’s a big handicap to your outcome and to your ability to build wealth.
A solution to this is a ‘no property’ overdraft. Typically those without property can easily obtain an overdraft over $50,000 simply by having a lender assessing 6 months of bank statements – last week we secured a $60,000 overdraft limit for a residential builder without any financials whatsoever. If you are a property owner, lenders will score and regard you higher than a non property and will be prepared to offer an overdraft limit much higher amounts.
With an overdraft that is no longer tied to your family home, it then allows you the freedom to look for a much cheaper home loan rate. With the best home loan rates now starting with a 2 on the front of them, that’s a big deal.
In addition to much cheaper home loan rates, lenders outside of the big 4 are offering cash out up to $1M against equity held in residential assets. This provides the opportunity for business owners to invest back into their businesses with access to a large amount of capital to drive growth and take advantedge of their business opportunities.
Much better than being handcuffed to your current overdraft bank, isn’t it?