Mortgages & Loan Agreements

Home loans and mortgages

Most people do not have sufficient funds to buy property outright and rely on a loan from a financial institution to complete their property purchase. In most cases, the property being purchased will be used as security for the loan and the borrower will be required to grant a mortgage in favour of the lender.

A mortgage is essentially a ‘statutory charge’ over a property or properties held in the borrower’s name. The mortgage secures the repayment of the money loaned and is registered on the property’s title. Registration of the mortgage protects the lender by alerting others who may be interested in the property to the existence of the mortgage which must be dealt with prior to a new legal interest being created. The loan contract gives the lender the right to sell the property if the borrower defaults.

By signing a loan agreement and granting a mortgage you are liable for regular repayments and other fees and charges set out in the agreement. It is important to understand these obligations which usually also include maintaining the property and taking out adequate insurance cover.

The terms and conditions of a loan agreement and the implications of granting a mortgage should be carefully considered.

Business funding

There are various finance options available for business owners or company directors who are looking for funding to increase cashflow, acquire assets, or take advantage of growth opportunities. Some examples include securities lending, subscriptions to shares, equipment leases, hire purchase agreements, and asset-based finance.

Equipment leasing and hire purchase arrangements are popular choices to acquire capital equipment such as plant and machinery without significant financial outlay. These arrangements are documented in a lease or hire purchase agreement setting out the terms and conditions between the lessor/lessee or lender/borrower. Typically, the owner of the equipment will draft an agreement outlining the terms, including any monthly fees. The lessee enters the agreement and is allowed to use the equipment throughout the term of the lease (usually several years) until the expiry.

Depending on the terms of the lease, it might be possible to purchase the equipment at the end for the current market or another value. If your lease agreement does not have a purchase option, or you do not want to purchase the equipment, it will be returned to the lessor at the end of the lease. If you want to have the option to purchase the equipment at the end of the lease, it is important that this is included in the contract.

Asset-based finance enables businesses to obtain funding secured against the company’s pool of assets which may include plant and equipment, inventory, stock and receivables. These arrangements can provide much-needed capital to assist in cashflow and allow the business to take advantage of market opportunities.

When considering funding options, it is important for company officers and business owners to select a product that is appropriate for their commercial needs and financial strategies. The legal and financial implications of any loan or funding agreement should be carefully considered. We can help by reviewing your proposed funding strategy and will explain important loan conditions so you can make an informed choice.

If you need assistance, contact [email protected] or call 03 9546 8155 for expert legal advice.