FAQ’s
How does it work?
Book an initial appointment which will consist of a 10-20 minute phone or Zoom discussion directly with Shaun. He will go out of his way to understand your financial needs and utilise his knowledge and experience in matching your requirements to the appetite of our panel of over 200 lenders. You will then receive a detailed proposal outlining the terms of loan products we believe best suit your requirements. From there we will streamline the application process through to settlement and beyond.
what size loans do you consider?
We can help you with anything from a $10K Business Loan through to a $500M property development facility.
what locations do you consider?
Our lender base offers solutions Australia wide.
what property types do you consider?
Our lenders will consider funding most types of residential, rural and commercial property within Australia. From houses to vacant industrial blocks, service stations to pubs, farms and office towers.
what is a commitment fee?
Often a Lender and/or a Broker will charge a Commitment Fee to cover their costs and expenditures outlaid in in assessing and/or reviewing your loan. Payment of such generally gives them additional comfort that you are genuinely interested in their product or service.
Please note however that some Commitment Fees are non-refundable whilst others a refundable subject to certain events occurring. For instance, some Commitment Fees are deducted from the Lenders Establishment Fee at settlement.
what is an Establishment fee?
Most lenders charge an Establishment Fee (Application Fee) to cover their costs in establishing your loan.
what is A VALUATION FEE?
Most lenders will want to obtain a valuation report from a reputable valuation firm in order to gain a detailed understanding of the property you are offering as security to the loan and its value. The cost of the report is in most instances passed onto the borrower.
what ARE LENDER LEGAL FEEs?
Lenders will often engage lawyers to formally document the terms of the loan they are offering you. This legal cost associated is in most instances passed onto the borrower.
what IS TITLE INSURANCE?
Title insurance is a type of insurance policy meant to protect home buyers, as well as lenders, from any damages or losses caused by a bad title. Most title insurance policies cover all the common claims filed against a title, including outstanding liens, back taxes and conflicting wills. The cost is often passed onto the Borrower.
what IS LENDERS MORTGAGE INSURANCE?
An insurance that a lender takes out to insure itself against the risk of not recovering the outstanding loan balance if you, the borrower, are unable to meet your loan payments and the property is sold for less than the outstanding loan balance.
what IS A RISK FEE?
Similar to Lenders Mortgage Insurance some lenders will instead charge their own upfront Risk Fee to cover themselves against the risk of not recovering the outstanding loan balance if you, the borrower, are unable to meet your loan payments and the property is sold for less than the outstanding loan balance.
what is a brokerage/service fee?
Some lenders pay Brokers commission and build such into their Loan Agreements. Others require that a referring Broker provide a Mandate/Service Agreement between themselves and their client, outlining the terms of their relationship with particular emphasis on remuneration.
what is an EARLY EXIT FEE?
This is a fee that some lenders charge should you repay a portion of a loan or discharge a loan entirely within a pre-defined time frame.
Such is applied to cover their costs in raising funds to establish the loan.
what is a discharge fee?
A fee charged by lenders to cover their administration and legal costs related to the discharge of a mortgage or title when a loan is repaid in full.
what lenders do you work with?
We work with over 200 lenders including banks, credit unions, building societies, second tier lenders, mortgage trusts, debenture funds, overseas funds, private lenders as well as various family offices and individuals as well as lending our own funds.
how much do you charge?
This largely depends on the loan size, type and complexity of the transaction. It is also dependent on the lender chosen.
Some lenders pay us a set Upfront Commission and may also pay an ongoing Trail Commission for as long as you have the loan with them. Others require us to charge a Brokerage/Service Fee and don’t pay any Trail Commission.
We shall confirm our fee structure in each loan proposal which we will tailor specifically to your transaction.
does submitting an enquiry affect my credit score?
Submitting an enquiry to Smith Invest does not affect your credit file as we do not conduct credit searches.
However, when you have identified the right loan solution and apply to a lender via our office, they will require you to sign a Privacy Consent to enable them to conduct credit searches. This will leave a footprint on your file.
what is a Bank Bill Swap rate?
The Bank Bill Swap Rate (BBSW), or Bank Bill Swap Reference Rate, is a short-term interest rate used as a benchmark for the pricing of Australian dollar derivatives and securities—most notably, floating rate bonds.
what is a Line Fee?
This is a fee lenders charge when you are not drawing the entirety of the approved facility limit at settlement. Such generally applies to Construction Loans or Lines of Credit where a facility limit is agreed and funds set aside by the lender to be drawn at a future date.
The Line Fee is commonly charged as a level of interest on the aggregate facility limit from the time the loan is established until the date it is discharged in full.
what is a default rate?
A penalty rate charged by a lender in the event of a Borrower either defaults on their loan repayments or violates the loans terms and conditions.
what is a variable rate?
A penalty rate charged by a lender in the event of a Borrower either defaults on their loan repayments or violates the loans terms and conditions.
what is a fixed rate?
A penalty rate charged by a lender in the event of a Borrower either defaults on their loan repayments or violates the loans terms and conditions.
what is SERVICEABILITY?
Lenders will often assess your capacity to repay the proposed loan which you seek to undertake. In this way they will review your income and expenses whilst factoring in the new commitment.
what is a debt cover ratio (DCR)?
When developing property, DCR is calculated as the Net Value of any Pre-Sales (Gross Sales less GST and Selling Costs)/Facility Limit.
what is an interest cover ratio (ICR)?
A ratio used by lenders to determine a Borrowers ability to service any proposed debt. Such is generally calculated on either a stand alone (Rental Income/Interest) or all sources basis (All Income/All Commitments).
In each instance the lender uses a benchmark rate (commonly 2% over the proposed rate) to calculate interest payable and seeks a positive result, such that income is greater than interest payable.
what is capitalised/RETAINED interest?
Some loan facilities incorporate loan interest for the prescribed loan term within the Facility Limit offered. In this way, the Borrower does not make repayments, rather utilises equity to cover the lenders interest costs for the full loan term.
what is PRE-PAID interest?
Some loan facilities require payment of interest for the prescribed loan term to be paid at settlement in advamce. In this way, the Borrower does not make repayments, rather makes an initial cash injection to cover the lenders interest costs for the full loan term.
what is A PRINCIPAL & INTEREST REPAYMENT?
Principal & Interest Repayments not only cover the interest cost of the loan but also amortise the loan such that the full facility limit is repaid in full and in addition to the relevant interest costs within the agreed loan term.
what is AN INTEREST ONLY REPAYMENT?
Interest Only Repayments are where the Borrower and/or Guarantor only make repayments in line with the interest applied to the loan. No additional funds are applied to reducing the original Facility Limit obtained.
what are your interest rates?
Unlike the home loan market where lenders often publicly quote their rates, commercial lending is assessed on a case by case basis.
how long does it take?
This will all depend on where you are in the loan cycle and what type of loan you require. For instance, you may or may not have a valuation already completed. From our experience, mainstream lenders tend to take longer than second tier/private lenders. Please communicate your expectations clearly when considering loan options.
who sees my information?
For details around how your information is used, treated, shared and stored by Smith Invest, please refer to our Privacy Policy. You can view such on this website and we shall also provide you with a copy upon engagement.
what is an LVR?
The LVR is the amount you are borrowing, represented as a percentage of the value of the asset being used as security for the loan. The lower the LVR, the lower the risk is to the lender and generally the interest rate.
what is ‘aS IS’ VALUe?
When completing Valuation Reports a valutaion firm will generally refer to the estimated market value of a property at the time of the report as the ‘AS IS’ Value.
what is ‘GRoss realisation’ or ‘on completion’ value?
When you develop property, the ‘Gross Realisation’ Value or ‘On Completion’ Value is the value of the property/s on completion of construction. Generally valuers record a "‘GRV Value’ or ‘On Completion’ Value both inclusive and exclusive of GST.
what is ‘IN ONE LINE’ VALUE?
Where multiple properties are owned on one title, valuation firms will generally apply a discount o the value of each dwelling, given the majority of buyers are in the market for a singular property as opposed to buying multiple.
what is the MArgin scheme?
The margin scheme is an alternative method of calculating the GST payable on sales of real property. It allows sellers of real property to pay GST equal to one-eleventh of the ‘margin’ rather than one-eleventh of the total sale price. Depending on when, and from whom, the property was purchased, the margin is generally the difference between the sale price and the amount the seller paid for the property. In some instances a valuation figure may be used in place of the original purchase price.
what are PRe-SALES?
A term used in relation to development loans, which refers to the sale of a property/s prior to commencement of construction or civil works. In this way, Contracts of Sale are entered into to purchase the property/s once complete for an agreed price and within a pre-described time frame known as a sunset date.
what ARE PRE-LEASES?
A term used in relation to development loans, which refers to the lease of a property/s prior to commencement of construction or civil works. In this way, Lease Agreements are entered into to rent the property/s once complete for an agreed price and within a pre-described time frame known as a sunset date.
what does WALE mean?
A t
IS gst payable on property purchases?
GST is applicable at a rate of 10% of the Purchase Price where a commercial property is purchased without a lease in place.
Where a lease is in place, this is considered a Going Concern and no GST is applicable to the purchase.
what does GOING CONCERN mean?
When it comes to commercial properties, if a property is purchased with a lease in place, the operation of that business within the premises is considered a going concern and no GST is applicable.
what is a registered lease?
Registration of a lease is the process of recording on the title to the land a tenant’s interest under the lease. Once registered (and the relevant fee paid), the tenant and their right to use the property will be shown on the title to the property. In the ACT registration is done through Access Canberra while in NSW it is through Land Registry Services.
In NSW, retail and commercial leases with a term (including any option periods) exceeding 3 years must be registered. Leases shorter than 3 years may be registered where the parties agree to do so. In the ACT lease registration is not mandatory, regardless of the length of the lease term.
what is a coded loan?
A loan subject to the National Consumer Credit Protection Act. The NCCP regulates all consumer credit including housing loans where the borrowers borrow in their individual names. The NCCP Act suggests that it does not apply to company borrowers or commercial property transactions.