Are Low Doc Commercial Loans available in Australia

With interest rates on the rise in Australia, hunting down high-quality investment opportunities has never been more important.

While the vast majority of investors will always be drawn to residential property, savvy investors understand just how lucrative commercial property investing can be. With investors on the hunt for yield, and with the ongoing lack of supply of quality assets, demand for commercial property continues to be incredibly high.

For investors getting starting in Commercial Property it’s important to understand that it isn’t necessarily more complicated, it’s just different to buying a residential property. Here are some things you need to know when getting started in the market.

Higher deposits required on Commercial Property

Most residential property buyers would know that it’s very possible to purchase a property with LVRs of up to 90-95%. For commercial property, the reality is that you’re looking at an LVR of 65-75% with some banks potentially offering 80% loans.

This is because commercial property is deemed riskier in their eyes and their loan value ratio (LVR is lower). Where residential property can be purchased with as little as $50,000 as a deposit to cover all necessary costs, commercial on the other hand is $75,000-$100,000 as a minimum.

So what’s the drawcard? High-quality commercial property has the potential to pay itself off in 10 years, compared to the traditional 30 years a residential property might take.

That means all of that money usually going to the bank, after the debt is paid, then goes straight into your pocket, not to mention the fact that it opens up the possibility to leverage equity and purchase a second, third and fourth property. So the decision to pay a higher deposit in the beginning starts paying dividends immediately afterward.

Types of Low Doc Commercial Loans available in Australia

When you purchase a commercial property, unlike residential, you do not come under the same credit laws as Residential property loans. This allows for other options that are not available for Residential Properties.

Types of Loans:

Full Doc Commercial Property Loans: Where all income verification is required similar to a mortgage for a home loan is generally the lowest rate home loan.

Low Doc Commercial Loans: This is where either your Accountants verifies your income or you can use BAS Statements or Business Bank Statements to verify your income. This is only for Self Employed Applicants with registered ABN’s and in Business for 12 months or more.

Lease Doc Commercial Property Loans: Are designed for investors with rental producing commercial properties. The Lease Doc product is where servicing is established by income from a quality third party lease servicing the debt without the necessity to provide financials or tax returns or confirmation of other assets or other liabilities.

Private Commercial Loans: This type of loan is known as an asset lend or no doc loans because the lender is primarily relying on the value and sale ability of the security

Potentially longer vacancies, but, also for longer leases on Commercial Property

When a residential tenant signs a lease, they have a number of ways of getting out of it should they choose to leave. For a commercial tenant, the lease is far more stringent and as a result, it is a huge financial commitment for the tenant.

This is because the success of their business is very much at stake and the property will often play a key role in that success. This coupled with commercial property having increased exposure to economic cycles, and, managing the end of a lease – where you may be required to make repairs or undertake maintenance – all mean that you need to be prepared for longer vacancies if a tenant leaves.

The great news is that if you choose a high-quality commercial asset in high-demand, low-supply areas, you can easily mitigate this risk, as these will always be snapped up by tenants. If you purchase a commercial property in a poor location and the building is in disrepair, then of course the vacancy periods will be longer.

Investors need to carefully assess this relatability potential. Such factors include the quality of the building, the location, rent levels, interest repayments and the state of the general market around it.

Getting the due diligence right will help ensure that the property won’t stay vacant for long.

Simple Interest Mortgage Advantage

There is a little-known mortgage product that exists in the marketplace today, we call “The Simple Interest Mortgage”. Our most financially savoy borrowers today utilize this product to grow and safeguard their wealth. In fact, The Colorado Mortgage Team’s Mortgage Engineer Clinton Sistrunk, has his current property financed with it. With a traditional amortized loan, you have no access to the equity in your home, without refinancing or taking out a 2nd mortgage. When you pay extra on your home you do not save any interest unless, you term out the loan paying it off in full. That is because the interest is front loaded and every payment is set in stone upfront with how much goes towards interest and principal. Making payments early also does not save you any interest.

With a simple interest mortgage, you turn all these aspects upside down. Interest is calculated daily so if you make a payment early you save interest in real time. Paying extra also saves you interest immediately. It is also combined with a checking account so your equity is always liquid instead of being locked into your homes vault just like with a HELOC. This allows you to put idle money sitting in lower return vehicles like savings and checking accounts to work for you into your home. This also helps you pay it off quicker and reduces the total interest you pay. Interest is calculated daily and then added to the principal balance at months end. Plus, there is no escrow account so you can also keep that money in the home helping to keep down the loan balance, saving interest until taxes and insurance come due each year. The payment which they add to the principal balance each month is interest only.

This loan can act as a form of insurance during economic slowdowns. It does not require a payment in any given month as long as you have the equity in your property to cover the interest only payments each month. If things got really tight you could choose not to make a payment for months. You would never default or have a late payment. It acts as an emergency fund or source of capital for future needs like college, medical or taxes and wants like trips or vehicles. This is a 30-year loan so you never need to qualify again to access your equity. Even better, it becomes a retirement planning tool, as a possible reverse mortgage replacement option that you control and is extremely flexible. No need to ever refinance to capture a lower rate because it is a variable rate loan, so as rates go down so does the interest rate on this product.

Want to learn more about this product? Sign up for a 1 on 1 simulator presentation with a mortgage specialist in this product. They will showcase the true power of this product for you. This ensures you have a firm understanding of the benefits and risks associated with this loan so you can make an informed decision and decide if it is right for your family.

Why move to Roseville CA

Roseville, California is a fantastic place to call home for many reasons. Located in Placer County, just northeast of Sacramento, Roseville is a growing city with a rich history, plenty of amenities, and a high quality of life.

One of the biggest draws to Roseville is its location. The city is situated just minutes away from both the Sierra Nevada Mountains and Lake Tahoe, providing residents with easy access to some of California’s most beautiful natural landscapes. Whether you’re a fan of skiing, hiking, or just taking in breathtaking views, Roseville has something for you.

Another reason why Roseville is a great place to live is its strong and growing economy. With a population of over 140,000, the city is home to a diverse range of businesses, including healthcare, retail, and technology. This means that residents have a good chance of finding a well-paying job in their field. Additionally, Roseville is strategically located near several major highways, making it easy to commute to nearby cities for work.

Roseville is also known for its excellent schools. With a strong emphasis on education, the city is home to several highly ranked elementary, middle, and high schools, as well as a number of colleges and universities. This makes Roseville a great place to raise a family, and provides residents with ample opportunities for personal and professional growth.

In terms of amenities, Roseville has everything you could ask for. The city is home to a variety of shopping centers, including the Westfield Galleria at Roseville, one of the largest malls in Northern California. There are also plenty of restaurants, bars, and cafes, as well as movie theaters, museums, and other cultural attractions. Plus, with its warm climate and numerous parks and green spaces, Roseville is a great place to enjoy outdoor recreation.

Overall, Roseville is a fantastic place to live, work, and play. With its prime location, strong economy, excellent schools, and rich amenities, it’s no wonder why so many people are choosing to call Roseville home. Whether you’re looking to start a family, advance your career, or simply enjoy a high quality of life, Roseville is the place for you.If you ever need a mortgage to buy a home in Roseville, you can find me on google.

VAT penalties – New rules

The VAT default surcharge is being replaced with a new VAT penalty and interest regime.

The new rules apply to VAT accounting periods beginning on or after 1 January 2023.

Late filing penalties

The new penalty regime operates on a points-based system. Each VAT return received late, including nil and repayment returns, will receive one late submission penalty point.

A penalty will be charged when the points reach a certain threshold.

The penalty trigger depends on the frequency with which returns are submitted.

Submission frequency: Annually

Penalty points threshold: 2

Period of compliance: 24 months

Submission frequency: Quarterly

Penalty points threshold: 4

Period of compliance: 12 months

Submission frequency: Monthly

Penalty points threshold: 5

Period of compliance: 6 months

Once the penalty threshold is reached, a penalty of £200 is charged.

Further penalties of £200 are charged for each subsequent late submission.

The points total can be reset to zero if all returns are submitted on or before the due date for the period of compliance and all returns due for the previous 24 months have been submitted to HMRC.

Late payment penalties

A penalty may also be charged if VAT owed to HMRC is paid late.

The penalty depends on how late the payment is made.

No penalty is charged if payment is made within 15 days of the due date. If payment is made between 16 and 30 days after the due date, a penalty equal to 2% of the VAT owing at day 15 is charged.

Where payment is made 31 days or more after the due date, the penalty charged is equal to 2% of the VAT owing at day 15 plus 2% of the VAT owing at day 31. Where a time to pay agreement is agreed, penalties are calculated by reference to the date on which the arrangement is made.

A further penalty is charged when the balance is cleared or a time to pay arrangement agreed. This is calculated at a daily rate of 4% a year for the duration of the debt.

To allow traders time to become familiar with the new rules, late payment penalties will not be charged during the first year (1 January 2023 to 31 December 2023) where payment is made in full within 30 days of the due date.

Late payment interest

From 1 January 2023, late payment interest will be charged on late paid VAT from the due date until the date payment is made in full. Late payment interest is charged at a rate equal to the Bank of England bank base rate plus 2.5%.

Repayment interest

The repayment supplement is withdrawn from 1 January 2023. Instead, for accounting periods beginning on or after 1 January 2023, HMRC will pay repayment interest on VAT that they owe. The interest period will run from the due date (or date the VAT was submitted if this is later) to the date that payment is made in full by HMRC.

Repayment interest is paid at a rate equal to the Bank of England base rate minus 1%, subject to a minimum rate of 0.5%.