FAQ’s on Leasehold Finance
1. What is Leasehold finance?
Leasehold finance already exists in Australia and around the world. It is now possible to adopt leasehold finance to Multiple Occupancy Land Sharing Communities in Northern NSW.
2. How does it work?
Instead of a bank or a lending institution using a freehold title as security, the bank uses a lease. The MO may need to make alterations to its constitution and each shareholder needs to sign a lease. The lease can be for a 100 years renewable. Basically the body corporate, or MO holding company leases the existing house or building improvement to the shareholder and then that lease becomes the document with which finance can be attained.
3. Are all MOs able to do this?
All Company Title MOs can do it. MOs under a “Tenants in Common” structure are harder to transfer to Leasehold but it is still possible.
4. Does everyone in the MO need agree to go to the leasehold?
No, and everyone does not need to take up the financing option if they do not desire or require it.
5. What are the advantages of going to leasehold?
The main advantage is that you are able to take a mortgage out on your share holding. You can also take the time and opportunity to clean up and redo shareholder agreements that may be out of date or not functioning so well anymore. Your share also becomes more valuable.
6. Any disadvantages?
There are some costs involved.
7. What are the costs?
The costs will vary on each particular property. The estimate on rewriting a constitution and shareholder agreements can average around $20,000. This needs to be shared between all the shareholders participating.
8. What is the next step if we wish to proceed and apply for a loan?
- Step 1 is to provide a copy of your existing shareholder agreement to solicitors.
You will need to supply a copy of your present lease agreement to:
Wall and Company Solicitors,
43 Stuart St Mullumbimby 2482. Ph 02 6684 3500 Fax: 02 6684 3395
- Step 2 is to contact us here at Byron Property Search to complete your loan application.
9. What kinds of loans are available?
Not all banks or lending institutions are able to provide leasehold finance. Those that do, offer a choice of loans at the standard rates available.