I am a new arrival here in Sydney and not familiar with Australian system. I have savings from the past which I would like to as deposit towards a loan. My query is, would it be wise to have a home loan first and then later use the house to obtain a loan for business or get business started first and get a plan to get a house.
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An owner occupier home loan will generally be the cheapest form of debt available. Lenders love having bricks and mortar as security, and with lots of competition in the home lending market, you will find the lowest interest rates and the most choice in terms of loan features and benefits.
Having a healthy deposit of at least 20% of the purchase price will also help to get a better rate and avoid lenders’ mortgage insurance (which insures your lender, not you – although you pay the premium).
A business loan on the other hand, is significantly more expensive than a home loan, with higher interest rates, shorter lending terms and less flexibility. There is also less competition for small business loans, so you might have to take what you can get.
If you are fortunate enough to have equity in your home, you may be able to use your home as security for an investment or business loan, giving you the best of both worlds.
I suggest you talk to a lending specialist that works in both the business lending space as well as home loans, for further information on your borrowing options.
Ultimately though, the choice to buy a home first or start a business is much more complicated than just the lending issues. You need to consider what is most important to you, and what is viable given your current financial position - and perhaps seek some personal professional advice from a suitably qualified financial planner before you act.
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