Small Business Finance Articles

See why the best mortgage is a simple mortgage.

Mortgages come with a wide variety of options, what do you do?  It's simple.  Keep the mortgage very simple.  It will be easy to manage, set goals  (Im not kidding)   Often a complex mortgage will slow you down. 

Rule No. one - always start with the simplest mortgage and slowly add features to the mortgage

There are many mortgage features to look at

• Offset accounts
• Splitting accounts
• Fixed or variable
• Interest only
• Portability
• No fees, some fee?
• And many more

I always recommend that you contact a mortgage broker when looking at mortgages and find out what options are available. The first thing a mortgage broker will or should ask you to talk about yourself and lifestyle.  

A mortgage is fitted to the client not the other way around 

• Employed/self employed/ what legal entity, if in a business.
• How much money comes in a month
• Do you need to hold cash for periods prior to paying
• What profitability or salary take home do you have
• Married/single/in between
• Financial position: pension funds, superannuation funds, investments
• Financial goals over next 5 to 10 years
• What personality are you, do you like details or big picture etc

 With that information the mortgage broker can suggest a loan.  Remember the standard variable loan is good for 90% of the population.

What would cause you to have other options?

Split in a loan   (multiple accounts) Partners in an investment may split the loans up for each partner.  Each partner is free to pay off their own portion  loan at the speed  with which they are comfortable.Its easy to keep track and account of who owns the property, rather than with a single account.

100% Offset Account    A Person has a business and needs to store money over periods. Would they set up a number of 100% offset accounts to keep the money separate?  It makes accounting easy and gives the business owner control over then various funds.  It allows the stored funds to be uses to reducing of the balance of the mortgage and keep the business and personal account separate.

Interest only vs. Variable     The mortgage owner needs to be able to access all the principle payment.  When all the principle payments need to come out, an interest only structure would be used. If it was a principal and interest loan only the payments above the minimum monthly mortgage payments would be able to be with redrawn from the mortgage.

There are countess variations to a mortgage.  In all cases contact a mortgage broker and ascertain your needs and then move forward.  But always remember a simple mortgage is a good mortgage.