Sometimes self-employed mortgage lenders experience financial difficulties that result in challenges maintaining their financial capabilities. Given the outstanding financial obligations they are still liable for, it’s important to consider solutions such as a debt restructuring loan.
A restructuring loan can be a good idea as it can provide you with several benefits. Benefits from restructuring your loan include freeing up some space for other funds such as a house renovation, a new car, and much more. However, restructuring your loan is not always necessary for all lenders. Sometimes, it can also be an impractical decision.
Read on to know more about the four ways restructuring a loan can be beneficial to you and whether it is the best decision for your current situation.
1. Get a More Suitable Loan Facility
When your business changes and grows, your financial needs do the same. You can consider getting a straight business loan in the start-up phase of your business as such a loan can come in handy. However, there may be a more suitable loan product now in the market.
For instance, a line of credit enables access to capital only if you need them, and asset finance can help you benefit from tax benefits on loans used in financing the purchase of income-producing assets. In particular, you can never go wrong with a loan restructure for providing you with such advantages.
2. Acquire Lower Interest Rates
Unfortunately, banks do not reward customers regardless of their loyalty to such a firm. While you might have been with the same bank since you were young, you cannot get any customer specials or discounts on your loan rates.
With a loan restructure, you get the opportunity to reduce your interest rate with your new lender and potentially benefit from special rates for new customers.
3. Enable You to Consolidate all Debts to a Single Lender
A common benefit from a loan restructure is debt consolidation. Small businesses usually obtain several debts with various lenders.
Fortunately, with a restructure, they can consolidate all their debts to a single lender. This benefit can help businesses with cash flow management. More so, it makes budgeting and payment processes less time-consuming.
4. Free Up Cash or Access Equity
You have the opportunity to access the equity you can use in growing a business with a debt restructuring. There's only a need for the loan to value ratio to stay within acceptable bank rates, varying depending on the lender and product.
Another advantage of restructuring your loan is being able to free up cash, ensuring you have access to money in covering challenges in your business. It can improve your cash flow, allowing you to access some money only if needed.
Before deciding on a loan restructure, it’s important to go through all its important details. Now that you know their benefits, the next step is to work with financial professionals to guide you along.
If you are looking for alternative business loans or debt restructuring loans, you should work with us at Wealthy You. We are an Australian mortgage company with almost ten years of experience, so you can make sure you’ll have experts that can help meet your financial needs. Contact us today to learn more.