Education…Frequently Asked Questions

The interest rate is higher than bank mortgage rates. Why?

This is correct. Strata Finance offers unsecured finance as opposed to secured mortgage finance where individuals offer their property as security. Our loans are directly with owners corporations, not individuals. Individual unit owners do not need to provide security or undergo credit assessment for our finance.

We offer the very best unsecured rates of finance for our customers.

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Why wouldn't we refinance our mortgages to pay for the work?

Sure this is an option. The question is can every owner afford to do this? And the cost of these mortgage funds ends up costing more over a mortgage term. In addition there are fees and government charges associated for each owner, when combined across all owners this is often more expensive than our finance.

The additional time and effort by each unit owner and administration involved by Strata Managers soon makes this option unrealistic.

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Do the banks and other financial institutions offer loan products to Strata Schemes?

Not that we are aware. Because owners corporations cannot mortgage the common property, any loan to an owners corporation is on an unsecured basis, which usually falls outside the banks', lending criteria. The focus and processes of banks are generally geared towards secured mortgaged loans.

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How is it that Strata Finance can offer loan products to Strata Schemes?

Strata Finance has been established for the sole purpose of providing innovative loan products to strata schemes free of mortgage constraints. Strata Finance has developed loan products specifically so building works can be undertaken without the need to raise lump sum additional levies from lot owners.

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How does a Strata Scheme repay a loan?

Loans are offered to owners corporations for 3 to 7 years with regular equal payments of principal and interest. Lot owners regular levies are increased on a unit entitlement basis to contribute to the loan repayment.

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How are we protected?

Owners are covered by the Consumer Credit Code protection.

We have heard of individuals and smaller bodies offering to finance strata expenditure with owners or owners corporations. This is a risky practice we would strongly advise against.

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What is wrong with each owner saving the funds over time or paying a special levy?

There is nothing wrong with these options. It is a matter of choice. There are however unique benefits available with Strata Finance that are not available with these options. They include:

  • Work can be commenced immediately. This is particularly useful for urgent work or expenses and also improves the building amenity quickly, meaning owners can enjoy the benefits now. In addition, if an owner needs to sell their property, the building value will be enhanced, and prospective buyers can see on the strata minutes the work has been completed. There are also no delays due to difficulties in raising the lump sum levies.
  • Building costs are contained. Each year building costs rise anything from 5 to 15%, meaning delaying works ends up costing owners more.
  • Free up individual owners cash flow. Owners cash flows are not affected by large one-off payments, and their individual borrowing limits are not affected.
  • Tax deductions. Some owners may be able to claim a tax deduction on the payments that are not available with special levies or one off payments.
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Can we receive an indication of how Strata Finance would work for our building prior to making an application?

Yes. Simply contact Strata Finance on 1300 301 068

Strata Finance will provide an approximate cost for each lot owner. We structure our finance to individual requirements with various rates, term, fee & no fee options.

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