between a rock and a hard place, page-10

welcome to the real world....
it has never been easy for small business to get funding from the banks....and there is a good reason for this...
the banks are not stupid, ignorant or devoid of economics...
most small businesses fail within 5 years...it is a very high number...or around 50% plus last time I checked...

admittedly in the old days, the manager had a hands on role, and had more power in the decision making process...
today the managers are all more like a staff supervisor, simply, following rules and a standard criteria...


****the only way the majority of small businesses get funding, is to put their principal place of residence up as security...
I have harped on about this over the years, as to being a good reason to become a home owner, if one looks to the future...and contemplates running their own business....
after telling the boss to shove his

I say welcome to the real world for a couple of reasons...
the low doc loans were, and have been a godsend.....
otherwise you twiddle your thumbs, whilst trying to save the difference of 40% ,between what they will lend 60% ....
that is a big ask for most people....
and that house you had you eye on, is long gone

or you pay the extra for a low doc loan, in most cases, it is only half a point higher than the average variable rate...at most it is 1%....plus pay the mortgage insurance a few grand...
or , if your business is going well, you do a full documentation loan, for 2 years of business...to prove you are making money....and you get a better deal....maybe 70% lvr with some other extra costs
If you have followed this forum for a number of years, you would have heard the misinformed yelling about low doc loans, and how those loans were only for losers ....
In most cases, the loans can be reviewed and upgraded to full doc loans within 3 years.....

the 2nd point I raise is, the majority of people consider their home as a roof over their heads, they are not concerned about the prices going up or down, or selling in order to buy back cheaper...that is a gamble, the majority would never contemplate....
you have done the deed, so be it...

now you have to get your finances in order, to be in a position to buy at a discount, when it presents itself to you...
***the banks will only make it harder to obtain finance, if the houses do fall in value...ie they will tighten lending criteria.
and the other little ace up their sleeve is....
they will put a lower valuation on the house you are borrowing against( they did this in 2008/09 with figures of $100,000 lower between banks).....so even if you find a house at the discount you are looking for, and the bank says its not worth the price you want to pay, do not expect the seller to drop the price....that is the real world some people are coming to grips with right now, although the banks deny this is the case.

that bank tightening, is not something the cowboys ever consider, when they scream for a fall in house prices....
they somehow believe, only one side has an affect, without the corresponding balance on the other side....

even if you have reasonable figures for a low doc loan,for the past 2 years, the banks are expecting a grim picture for the next 2 years at least, for all, including small business that will be hit the hardest....so a 60% lend now, might become 50% in 6 months time....
good luck....
do not be concerned with what anyone else thinks, you made a decision, you must work through it....
it is not easy running a business, you have to have the gutz of your convictions to make it work, or be able to see the dips and troughs in the road, where a deviation is necessary....
you might be interested in the weekend AFR, where they spoke to some very successful people, and asked them, what was the biggest mistakes they made, business lessons they never forgot........most admitted mistakes, but it was their conviction, dedication to their idea, that saw them succeed.