Strata Borrowing questions

Your Questions Answered

  • Why do people borrow money in an owners corporation or body corporate?
    Owners corporations or bodies corporate borrow money for renovation and rectification works, emergency repairs, green initiatives, to pay insurance premiums, to cover litigation costs and other capital requirements.
  • How long is the loan term?
    A strata loan is from 1-12 years with up to two years on a fixed rate and up to two years interest only.
  • If an individual property is sold what happens to the loan?

    As the loan is not personal the debt is repaid by and remains with the owners corporation or body corporate. Your owners corporation collects money from you via your levies and these funds are used to pay for anything your owners corporation must pay. The loan is repaid from these levy funds so the new owner, once the property is sold, will continue to pay these levies, and part of which will be used by the owners corporation to repay the loan.

  • What happens if the loan goes into default?
    In the event of a default we will contact the owners corporation or body corporate, normally through the strata manager, and discuss the reason and work with the owners corporation to agree the best course of action.  Should hardship exist and the corporation is residential then the NCCP Act will apply (hardship is dealt with on a case by case basis). In cases where an owners corporation fails to communicate and no resolution is achieved legal action would be taken.
  • How does the loan affect my levy payments?
    Levy payments will be increased to cover the loan repayments once the owners corporation or body corporate has agreed to the amount and the term of the loan.
  • What do people use strata borrowing for?
    There are many things money from a loan is used for including repairs, enhancements, or even legal fees. The body corporate or owners corporation need to agree at an AGM/EGM on what the loan will cover and how it will be used.
  • What are our options if we choose not to go with a strata loan?
    One option is to not do anything at all but this may risk the value of the property decreasing or even injury from deteriorating structures. The other option is to raise a special levy which is often not a favourable choice for owners.
  • Can I pay out the loan?
    Yes, the entire loan can be paid out early with no penalties (except if the loan is in a fixed interest rate period) if agreed upon by the owners corporation/body corporate.
  • How much can we borrow?
    This will depend on the circumstances so it is best to discuss this with a member of the StrataLoans team.
  • What security do we use?
    This is an unsecured loan. There are no mortgages, liens or charges over the property.
  • What fees and charges are there?
    The only initial cost for a loan is an application fee of $600 which is payable once approval has been given. Beyond this there are no setup fees, line fees or unused limit fees. You only need to pay interest for the funds that you actually draw after you draw them.