Overview
The first step in a loan agreement scenario is to take instructions regarding the terms of the loan.
The main loan terms are usually:
- Loan Principal – how much is being lent
- Loan Term – how long is the loan for
- Repayments – what repayments are required to be made, how much and how often
- Interest – is interest payable, and if so, at what rate
- Default – what rights arise if there is a default
- Security – what security is required/appropriate in the circumstances of the loan
Depending on whether or not the loan is a commercial lending, a vendor finance agreement, or a family loan, there will be different risk appetites for the lender, and different appropriate loan terms such as interest rates and security.
Deed of Loan
We have three main Deed of Loan precedents for use:
- Commercial Deed of Loan
- Family Deed of Loan – the precedent can be accessed here
- Vendor Finance Agreement
Mortgage
It is common for lenders to require a security mortgage, especially where the loan is for a significant amount. A security mortgage may be taken over real property interests:
- Of the Borrower
- Of a Guarantor – however, note at legal advice and financial advice certificate should be obtained
- That are being purchased with loan funds
It is also advisable to have a security mortgage even where the loan is between related entities, as it puts the loan on a more commercial and arms length footing.
The National Mortgage Form is now the over real property in Queensland. We have an internal office precedent which amends the standard National Mortgage form with respect to referencing a Deed of Loan, and the standard mortgage terms document.
The National Mortgage Form precedent can be accessed here
The standard mortgage terms document can be accessed here
Commercial loan agreement
Family loan agreement
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