Finance providers typically include banks, mortgage funds and credit unions. They are an essential part of the property-investment industry because of the amount of funds required to purchase property. Property sales largely rely on people being able to borrow funds to purchase or develop properties.

There are a number of finance service providers in the market (such as mortgage/finance brokers) who provide information on loans for property investors. They will search their databases for all the ‘money lenders’ and match them against the criteria given by the client. Clients may wish to have a variable interest rate, low interest, options for redraw and the client’s needs are taken into account when the finance providers calculate the best options.

These brokers and finance providers are usually paid a fee/commission by the lender for locating and securing borrowers, so it is important that the investor ensures that the loan they are eventually offered is actually the best for them and not the one possibly providing the best commission. Reputable finance service providers will act as non-bias brokers.

When the purchaser is borrowing funds and/or the vendor needs to have a mortgage or mortgages discharged on a property at settlement, the relevant financial institutions need to be fully informed of the contract and its conditions. The purchaser’s lending institution will require a valuation of the property prior to agreeing to make funds available.. The purchaser will require a written confirmation from the bank when finance is approved to fulfil a ‘subject to finance’ condition in the contract.

 

 

Activity

Locate and investigate four finance provider organisations.

  • What is the best way for your clients to locate these organisations and what information will they be required to give?