What is the rate on your business loan?
About ten years ago business lending became very competitive and the banks introduced new products for business loans secured by residential property. The products were given catchy names and businesses took on these products in order to save up to 2%. The interest rate on these loans was very similar to home loan rates.
The GFC brought about the reduction of RBA interest rates and the much publicised home loan rates were reduced accordingly. “Small business failed to receive the big interest rate cuts enjoyed by mortgage holders in the financial crisis, as political pressure on banks focussed on mortgages.” (Clancy Yeates – Sydney Morning Herald – 29/12/09)
The gap between home loan rates and business loan rates in many cases has returned to the levels of ten years ago. It could even be said that income from business lending is being used to subsidise the very competitive market of home loan lending as the business market does not make the headlines.
There are still some banks outside of the big four which are providing lending to businesses, secured by residential property at close to home loan rates. I have successfully refinanced a few business loans recently. In one case, the customer is saving $16,000 pa in interest. The cost of refinancing was approximately $1,200.
There is no reason for you to be paying a premium for your loan just because it is used for business purposes.
Give me a call or an email and tell me the rate on your business loan and I will do a review for you.