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Topic
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We are 8 unit owners corporation in Armadale, inner south east of Melbourne.
We will need to raise say $7,000 to pay for roof repairs.
We are looking at raising a special.
We could look at a strata loan. Some questions on this:
According to Victorian legislation what are the legal requirements ?
What are the current interest rates ?
Establishment fees for the loan are high based on a $7,000 loan with Macquarie charging a $1,000 fee and lanock charging $600, which makes me doubt whether this too expense and not worth it.
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The strata lenders should be able to tell you what their current interest rates are. Whenever I’ve checked they have been quite high. I think it’s because the loan is not secured against an asset (like a mortgage).
Don’t forget that special levies can be raised in installments. So a $7,000.00 special levy, at $875.00 per lot, could be raised over a 6 or 12 months period in 2 or 4 installments which might be easier for lot owners to manage.
It can also depend on when the works need to be done and when other major items of routine expenditure, such as insurance, occur within the scheme’s financial year.
Most strata schemes in Victoria don’t have separate administration and maintenance (sinking) funds which gives them a bit more flexibility on how funds are raised and spent during the scheme’s financial year.
$7,000 is on the low side for a strata loan. Lannock will lend it to you, but as a very rough rule of thumb, a strata loan makes economic sense when the special levy would be about $1-2,000 per lot for a large property and $5,000 per lot for a smaller property such as yours.
The suggestion about instalment payments might be suitable in your case, it depends what owners can afford and how urgent the works are.
To help OCs through the virus, Lannock has a Levy Assist loan that could help. We have waived all fees, including the establishment fee so that would resolve one of your problems.
We’ve also created a special Strata Premium Funding loan which also has no fees. We have pre-approved every OC in mainland Australia for this SPF loan.
Best to ask your strata manager about the legal requirements, as this isn’t really the place for legal advice. But, very generally speaking, you’ll need to hold a general meeting.