#19476
Jimmy-T
Keymaster
Chat-starter

    @Waratah said:
    Could someone explain why a strata loan causes more concern to a prospective purchaser than a large special levy?  

    I think that falls under speculation and opinion rather than fact.

    Consider this,  assuming the amount hasn’t already been paid, the prospective purchaser will take a look at the proposed special levy and deduct it from the value they place on the property.  In a cooling market, that is a very real scenario.

    However, if they are informed that major works are proposed and there will be a strata loan taken out, meaning an amount will be added to their levies for the next however long, that is not going to be a case of simple subtraction. Whether or not that puts them off buying is another matter entirely

    Some people abhor loans in any form, others live off their credit cards, accumulating debts as they go.  Some have the money lay out on large one-off payments.  Others would have to sell their property if they were hit by a huge bill (although if they have any equity in their property they could probably get a second mortgage).

    Paul Morton of Lannock talks about the hidden cost of levies – the opportunity cost of spending money that then can’t be invested or ends up attracting 20 percent interest on your credit card.

    I personally think strata loans are a more equitable form of raising finance and they are probably less likely to scare the horses.

    The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.