Restructure lending to significantly improve Cash Flow

This month we completed a deal for a client who wanted purchase two pieces of machinery for his expanding concrete pumping business. In this scenario the applicant’s main objective was to maximise cash flow to ensure the continued smooth running of the business through a growth phase.
Each machine cost $170,000 amounting to a total loan of $340,000. A traditional lease would require a repayment of $5,500 per month * Based off a 5 year term with a 25% residual payment.
We analysed his overall financial situation and we quickly recognised that the most cost effective channel was to tap into the equity he had accumulated in his home to fund the purchase.
With a valuation of $1.2m and a loan of $330,000 there was substantial equity that could be accessed through refinancing without taking the loan to value ratio too high. His current home loan repayment was $1,500 per month.
After a review we implemented a strategy to refinance his existing mortgage of $330,000 and then released $340,000 equity to purchase both machines under a separate loan split for deductibility.
The end result was that the client’s total monthly repayment was just $3,350 for the new home loan and both machines. By packaging his overall borrowing into one low interest rate loan he made a substantial $3,750. Add that to the $9,000 of additional revenue that the new concrete pumping machines generated each month and we had helped this client significantly improve his cash flow.

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