Repayments per month
- potential savings for lot owners by allowing works to be carried out quickly with upfront funding, rather than stretched out over a period of time
- strata improvement loans reduce the immediate cost burden on you to fund upfront large-scale capital works
- funds are available quickly and works are not delayed while funds are being collected
- multiple repairs or refurbishment works can be bundled into one project which can save time and money, and minimise disruption to owners, tenants and guests
- loan repayments are incorporated into your quarterly strata levies
- there is no mortgage or personal guarantee required to secure the loan by individual lot owners
- there are no early repayment fees
- an interest rate discount may apply if the Strata Plan banks with Macquarie Bank
- funding provided by a reputable financial institution, that has specialised in providing financial services to the strata industry for over 25 years.
- enhanced relationship with your clients by informing them of a manageable, alternative funding solution
- Macquarie Bank, not a third party, provides the funding so the process is smoother and simple
- lot owners gain access to specialists within the strata industry team
- an interest rate discount may apply if your client banks with Macquarie Bank
- your clients will experience great service from Macquarie.
Frequently asked questions^
- Owners corporations
- Bodies corporate
- Community associations
- Company title
- Self Managed Strata Plans
- Building management committees / Building management statements / Principal bodies corporate
- Structural improvements
- Aesthetic improvements
- Energy upgrades
- Mechanical improvements
- Repairs and maintenance
- Legal or litigation costs
- Development funding
- Short-term cash flow funding
- Insurance premiums**
**Insurance premium funding is available from Macquarie Pacific Funding.
- If the loan amount requested satisfies the Bank's lending guidelines and credit criteria, there may be no need for owners to contribute their own funds into the project.
- In the instance where the Bank is only partially funding a project, the owners will be required to contribute their own funds before drawing on the funding provided.
- The Bank has determined its lending guidelines for this loan type based on a number of criteria, including maximum loan amount per lot and the impact on affordability of levy payments.
- The Bank makes its lending decisions based on these criteria, using our understanding of the industry as well as compliance with relevant legislation, including the National Consumer Credit Protection (NCCP) Act.
- That sometimes results in the Bank not being able to lend the full amount requested by owners. The Bank will discuss partial funding options in those circumstances.
- There are also legislated limits in place for Strata Plans to borrow funds.
- The loan is provided to the Strata Plan as an entity, rather than multiple loans to individual owners.
- Owners would need to consult with their Strata Manager to see if differentiated levies were possible to allow for this type of mixed funding arrangement, which would be an arrangement amongst the owners, rather than with the Bank.
- 1 to 10 year loan terms are available for residential Strata Plans. A loan term limit of 5 years applies to commercial or mixed property types.
The first step is to submit an application form or online enquiry form. A proposal will then be put together which outlines specific terms for the loan and also outlines what needs to be provided to complete the credit application.
Typically these include:
- a signed Acknowledgement of Intent to Proceed
- a copy of the quotation, agreement, contract or invoice for proposed works to be carried out
- a list of aged levy debtors
- copy of strata roll
- financial statements of Strata plan for the last two financial years.
The following conditions called conditions precedent (CP) are required to be met before the loan may be settled:
- receipt of the Strata Plan's financial statements, including details of levies which have been prepared in accordance with applicable laws for the past two financial years
- copies of any agreement/contract/invoice between the Strata Plan and any contractor or provider of capital works or services
- a copy of the strata roll of current members
- a list of aged levy debtors
- a copy of the minutes from the Annual General Meeting (AGM) passing the resolution(s) in accordance with applicable laws to carry out works and to borrow (including the loan amount, term, purpose and the Bank being the lender) and to impose an additional levy
- Notice of Resolutions executed under common seal
- where the loan is $1 million or greater, an insurer's certificate of currency or other acceptable evidence of building and other insurances, including public liability insurance
- other reasonable requirements as notified by the Bank.
If a Quantity surveyor (QS) or project manager is required:
- a confirmation of the appointment by the Strata Plan of a QS, building project manager (or other suitably qualified person satisfactory to the Bank) for the purpose of overseeing the capital works being undertaken.
Undertakings during the life of the loan:
- annual financial statements on request
- annually (or upon request) updated list of aged levy debtors
- if the NCCP does not apply, the loan will be subject to review by the Bank annually
- at no time will the plan be a Self Managed Strata Plan, the plan must be professionally managed at all times
- the Strata Plan will take all actions necessary to the extent permitted by law to pursue overdue levies from individual lot owners to the satisfaction of the Bank.
If a QS or project manager report is required:
- receipt of a report at each progressive drawdown of funds certified by a QS or project manager appointed by the Strata Plan (or other suitably qualified person acceptable to the Bank) as to the cost to complete the capital works
- Please refer to your specific loan contract for details of CP's and undertakings.
To ensure we are complying with Anti-Money Laundering legislation, we need to identify the following parties if they have not been previously identified by the Bank:
- the Strata Plan executive representatives who are signing the loan documents
- individuals who are either authorisers or nominated signatories on the account that appear on a signature nomination form (this includes the strata manager if they are a signatory and the Strata Plan representatives if they authorise the signatory nomination form).
A motion needs to be passed that the Strata Plan agrees to enter into a loan contract. It must state the amount of the loan and note Macquarie Bank as the financier. Please refer to your Strata Manger for the specific motion as this is reliant on state based legislation.
In certain circumstances where a commitment fee has been paid, credit approval can be sought prior to approval at the AGM or EGM and loan documentation may be provided.
In some instances, depending on the loan size or complexity of work, the Bank may request authorised invoices. If this is the case, it will be stipulated in the loan contract.
- The initial loan approval is valid for 90 days after credit approval is received.
- If funds are not drawn within 90 days, the Bank will need to reconfirm that the situation of the Strata Plan hasn't changed.
- If funds are not drawn within 12 months of credit approval, the credit application will become void and a new funding request submitted.
- No - the loan repayment is incorporated in the normal administration or sinking fund levy with ongoing levies expected to be increased to cover loan repayments (or the introduction of a special levy).
- The interest rate reflects a number of factors but primarily the fact that the loan is unsecured.
- Remember, as a comparison, there is an economic cost for every lot owner associated with an upfront special levy, whether as interest forgone on their cash reserves or as interest paid on their mortgage or credit card if they are required to borrow the funds to meet an upfront special levy.
- We recommend Strata Plans and lot owners obtain their own financial, legal and tax advice in relation to the proposed loan.
- Variable interest rates are reviewed regularly.
- Further discounts to the interest rate may apply if the Strata Plan banks with Macquarie.
- Loans can have up to 12 months interest only.
- Loan repayments post the interest only period will be structured so that the loan balance is fully repaid by the end of the agreed term.
- Establishment fee of $1,000 (this can be partly paid as a commitment fee of $500).
- There are no standard ongoing fees or charges, including no early repayment fees.
- If the loan is not drawn down in full initially, a fee of $100 per additional draw down will apply.
- Any other adhoc fees are detailed in the loan contract.
- The loan can be either fully drawn (and placed in a building's trust account) or progressively drawn down if appropriate.
- Please note that repayments will not be adjusted by the Bank for partial draw downs unless specifically instructed to do so.
- Each drawdown beyond initial settlement comes at a fee of $100.
Yes - we can arrange to provide access to the loan facility via Active Banking in order to keep financial statements up to date.
- The strata manager on behalf of the Strata Plan is required to follow the state-based legislation and pursue collection of levies in arrears.
- Treatment of levies in arrears are no different in the instance where a loan is in place.
- If this causes the Strata Plan to fall into arrears on its loan, default interest may be charged on any overdue amounts and the Bank may seek to commence default and recovery proceedings against the Strata Plan.
- A Strata Plan is required by strata law to meet its financial commitments.
- If it cannot meet repayments, the Bank can initiate enforcement and recovery action against the Strata Plan.
- A loan variation, including a new credit approval, would be required.
- Additionally, a formal motion confirming the variation (including levy increases and increased loan amount) would need to be approved and signed off by the Strata Plan
The loan repayments will form part of the annual administration or sinking fund budget
- There are no penalties for early repayment, except if the Strata Plan wants to repay a loan that has a fixed interest rate
- In that circumstance, the Bank would need to determine the fixed rate break costs (which depends upon a number of factors, including time to expiry and interest rate levels).
- The owners should keep in mind that these loans are not redrawable, so any principal paid early cannot be accessed at a later time - they would need to apply for additional funding.
- Yes for unregulated (commercial strata only), with principal payments quarterly and interest paid monthly.
- For regulated facilities (residential strata) the payment schedule for both principal and interest repayments are on a monthly basis.
- Loans are not individually linked to owners. The responsibility for meeting payment is still the Strata Plan's.
- The new owner would assume responsibility of the loan repayments through their levy contributions.