Flexible finance
We live in a world where corporations really believe that the consumer increasingly wants to be in the driver’s seat.
Companies plan whole marketing programs around the flexibility of their products and the range of choice available to the average punter. Frankly, I find diversity of choice in many areas simply bewildering. Give me two mobile phone plans to choose from and I’ll pick one, give me 20 and I have no idea. Paralysed by indecision and procrastination I end buying nothing and making do with whatever I’ve been using.
I’m the guy who can’t decide on what to eat if the menu has more than six options and can’t book a hotel room if there are too many vacancies. I’m guessing that if you are over 40 and busy you may sympathise with my state of mind.
The strategy of choice seems to be equally rampant in the banking sector if you are a home loan borrower. Fixed rates, variable rates, rewards programs, off set accounts, standard rate discounts and incentives are de rigor for the lenders as competition for the home and investment property borrowers heats up.
I notice some home loan lenders are even offering cash incentives to change banks. All of this sounds like good healthy competition for the home loan lending dollar but what about business and commercial borrowers. Other than a few motherhood statements that spruik the fact that the banks are supporting business we rarely see any tangible and concise information about what a business borrower can expect from the lenders. The truth of the matter is that it is difficult for a bank to advertise the specifics of a business finance offer because, as luck would have it, every deal can be negotiated on it’s merits.
The net result is that within reason the banks will pretty much entertain any proposition that makes sense, provides reasonable security and does not undermine the lenders profit margins to an unacceptable degree. The fact that when we talk to the banks on behalf of a client it is on the back of millions of dollars’ worth of business introduced ever year seems to help them sharpen the pencil and focus the mind. Want to take a variable rate interest only option and paid down debt as you see fit. No problem. Redraw advance payments. Yep, all good there to. Move from a variable to a fixed rate with no bank charges. Sure, why not. Split your loan to take advantage of a combination of fixed and variable rates.
Great idea. Gear up on a residential property at residential rates and use the funds for business purposes in a company name. Good to go! Refinance and have your new lender help with costs. Always open to the discussion. Valuations paid for by the bank. Yep, can do.
The message here is simple. Don’t assume you know the bank’s rules and only ask for products you think they will approve. Go for the wish list and surprise yourself. Even better, engage an industry expert broker to come up with a package and do the hard yards for you. Chances are the banks will have seen great volumes of business from your broker and will be keen to keep them happy. It’s an easy game if you know how to play.
In closing a little something from Winston Churchill on negotiation: At a dinner party one night, a drunk Churchill asked an attractive woman whether she would sleep with him for a million pounds. “Maybe,” the woman said coyly. “Would you sleep with me for one pound?” Churchill then asked. “Of course not, what kind of woman do you think I am?” the woman responded indignantly. “Madam, we’ve already established what kind of woman you are,” said Churchill, “now we’re just negotiating the price.”
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