In July, the Royal Commission into Banking shone the spotlight on the financial and emotional devastation faced by farming families affected by bank foreclosures.
For me, the hearings of the Commission highlighted what I believe is a lack of understanding about farming businesses and the unique needs associated with securing finance for farming operations or planning for a future after farming.
The good news is, there are options beyond the banks.
The need to secure finance is a part of life for most farming businesses, however it’s important that your lending options consider ‘drought-proof’ strategies and the inevitable challenges of living and working on the land. Using a mortgage broker or specialist rural credit adviser allows farming families to explore their options for accessing funding beyond the mainstream banks.
A recent report by Deloitte Access Economics, The Value of Mortgage Broking, outlines some key statistics about mortgage broking in Australia.
- Three in ten mortgages arranged by mortgage brokers are for customers in rural or regional areas, which results in improved access to home lending for rural and regional Australians.
- Brokers depend on strong relationships – more than 70% of mortgage brokers’ business is referred from existing customers.
- Mortgage brokers arrange more than half of all Australian home loans each year, and this proportion continues to grow.
- Mortgage brokers drive competition by improving access to lenders that are not major banks or their affiliates. The average mortgage broker has access to 34 lenders and uses an average of 10 lenders on their panel, bringing more choice to consumers.
There are some important factors to consider when it comes to your financing needs:
More than the money
Your financing decisions are not just about the loan and repayment conditions. Financing should also take into account all aspects of your business, including your business structure, business goals, and long-term succession plans, as well as your personal financial goals.
Involving trusted professionals such as your stock agent, mortgage broker, financial adviser, accountant and lawyer, can make a significant difference to your long-term financial outcomes through integrating their specialist knowledge to consider:
- Structuring your loan and business for tax advantages;
- Planning your loan repayments in consideration of your business goals and strategic objectives;
- Negotiating equipment deals using available finance; and
- Assessing the loan period in relation to your personal financial and retirement needs.
True understanding and a trusted relationship
There is no ‘one-size-fits-all’ solution for rural financing, but what is most important is using a broker who understands the challenges you face as a farming family. When your income depends on factors out of your control, you need a tailored and holistic solution. Ask Dibbo for more information on types of unique lending requirements for farming families.
We live in a rural community and understand first-hand the needs and challenges of country life. We make it our mission to get to know our clients and their individual circumstances in great detail so we can provide appropriate options and offer genuine support. Hence our mantra, ‘drive down every driveway’.
I specialise in offering integrated solutions to multi-generational family groups that consider all aspects of your personal, business and farming lives. If you would like to discuss your lending needs, including home and business lending, or equipment finance lending, I invite you to contact me today on 08 8253 2906 or email info@financialservicessa.com.au
This advice is provided by Phillip Dibben under Financial Services SA rural business consulting services.
Phillip Dibben (ACR 420263) is an MFAA* Approved Credit Adviser, including SMSF lending, and is an Authorised Credit Representative with Riverland Lending Services Pty Ltd, ABN 37 1415 814 080 ACL 391835, and is licensed to provide advice in all consumer and business loans including equipment finance. All loans are subject to lending and approval criteria.
Phillip Dibben is also a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.
*The Mortgage & Finance Association of Australia (MFAA) is the peak national body providing service and representation to over 11,000 professional finance brokers (mortgage and finance brokers, mortgage managers and aggregators) to assist them to develop, foster and promote the mortgage and finance industry in Australia.