Sometimes referred to as a ‘goods mortgage', this product is simply a mortgage over capital equipment where the financier gives the lessee ‘cash' to purchase a tangible asset, which becomes the subject of the mortgage. A fixed charge over the asset is registered on the ASIC report of the borrowing entity/company, which has to be paid out in full, and removed by the lender, prior to future sale of the asset.
Tax ownership of equipment with lessee – therefore allowing the lessee to claim GST back in full in next BAS statement (as if the item was paid for in cash).
No stamp duty payable on monthly payments
Flexibility and ownership as per CHP
Less expensive method of financing higher value capital equipment items
Relatively high establishment fees/legal fees/documentation
Stamp duty is payable up-front. It is calculated at 80 cents per $200, based on the amount financed
Only cost effective for larger transactions – a relatively expensive product for less expensive items (< $50,000)