Hybrid Strata Loan
Use Your Own Money or Borrowed Money
The funding solution when some owners want to borrow money and others don’t.
The Firstrata Hybrid Loan® is an innovative funding model that gives each owner the power to choose how they fund their share of essential building works.
Flexibility for Owners
Each owner makes their own choice of using their own money or borrowed money. No one is forced into a one-size-fits-all finance model.
No Delays to Works
By accommodating mixed payment preferences, the Hybrid Loan lets your strata scheme move forward with building works, overcoming voting deadlock.
Owner Harmony
With over 20 years of experience, the Firstrata team provides personalised loan solutions and digital end-to-end service, making the process smooth for owners, committees, and managers alike.
One building. Two payment choices.
Pay upfront and avoid interest, or repay over time.
Each owner decides what works best for them.
How It Works
This short video explains how some owners can pay upfront as
Self-Funding Owners (SFOs), while others spread their financial
commitments over the life of the strata loan.
Two Owners, Two Payment Paths
See how a Self-Funding Owner and a Loan-Funded Owner are treated under the Hybrid Loan.
Each owner can choose the payment option that suits them.
Each owner can choose to:
- Pay upfront and pay no strata loan interest, or
- Spread repayments over the life of the strata loan
Self-Funding
Owner
Pays their share upfront and
pays no strata loan interest.
Loan-Funded
Owner
Spreads their financial commitment over the
life of the strata loan through loan levies.
- Those owners who pay upfront, called a Self-Funding Owner (SFO) do so by lending money to the strata scheme.
- A Self-Funding Owner (SFO) contributes their share upfront by lending those funds to the strata scheme.
- They then receive a levy credit that offsets the loan levies charged, so they have no further loan repayments to make.
All owners are charged loan levies according to their lot entitlements, in line with strata legislation.
SELF-FUNDING OWNER(SFO)
Ms Jane Lin
Jane’s address
Tax Invoice: 12345
Due Date 1 July 2025
Levies for the period: 1 July 2025 – 30 September 2025
Strata Plan Number: SP12345
Address: 45 Smith Street, Urbanville, This State, 1234
Lot Number: 101
| Invoice Summary | Amount | GST | Total |
|---|---|---|---|
| Administration Levies | 1,000.00 | 100.00 | 1,100.00 |
| Sinking Fund Levies | 500.00 | 50.00 | 550.00 |
| Loan Levies | 3,000.00 | 300.00 | 3,300.00 |
| Total Levies Payable (inc GST) | $4,950.00 | ||
| Less SFO Levies Credit | $3,300.00 | ||
| Net Amount Owing (inc GST) | $1,650.00 | ||
NON-SFO
Mr Mo Ibrahim
Mo’s address
Tax Invoice: 12346
Due Date 1 July 2025
Levies for the period: 1 July 2025 – 30 September 2025
Strata Plan Number: SP12345
Address: 45 Smith Street, Urbanville, This State, 1234
Lot Number: 102
| Invoice Summary | Amount | GST | Total |
|---|---|---|---|
| Administration Levies | 1,000.00 | 100.00 | 1,100.00 |
| Sinking Fund Levies | 500.00 | 50.00 | 550.00 |
| Loan Levies | 3,000.00 | 300.00 | 3,300.00 |
| Total Levies Payable (inc GST) | $4,950.00 | ||
Stuck with an Inflexible and Expensive
Strata Loan – You Don’t Need To Stay
Join the growing number of strata owners who are choosing to refinance their existing strata loan with a Firstrata Hybrid Loan®.
Even if your project is fully or partially complete, you have the option of refinancing your existing strata loan with the Firstrata Hybrid Loan®.
How Much Do I Pay?
Results are estimates, and actual repayments may vary based on specific lending criteria.
Hybrid Loan Calculator
Calculate your upfront payment or quarterly loan levies
0.00%
To become a Self-Funding Owner, your upfront payment amount is
$0
one-time payment
OR
Your ongoing quarterly loan levies are
$0
every quarter
Hybrid Strata Loan Process
For Strata Managers – The Real Support We Provide
The inflexibility of strata legislation can make the administration more challenging.
This is why Firstrata Finance has developed a suite of processes, procedures and educational tools to make life as easy as possible for strata managers.
Strata managers choose Firstrata because we don’t just provide funding — we provide complete operational support for committees, owners, auditors, and accounting teams.
Our service is designed to save time, reduce administrative workload, and ensure every aspect of the loan is handled accurately and professionally.
Information & Education for Committees and Owners
We make complex funding decisions simple and transparent:
- Host information sessions for committees, owners, and building stakeholders
- Present financing options, loan impacts, and real case studies
- Provide helpful guides, calculators, and comparison tools
- Attend meetings (in-person or online) to support decision-making.
This builds trust, clarity, and confidence especially for major capital works projects.
Full SFO (Self Funding Owner) Administration
Firstrata handles the entire SFO lifecycle on your behalf, including:
- Managing all SFO owner documentation, forms, and declarations
- Collecting SFO payments securely and issuing Trust receipts
- Responding to all SFO questions and owner enquiries
- Providing clear instructions and guidance for committees
This removes the administrative burden completely from the strata manager.
Document Preparation & Execution Management
We prepare all required documentation to ensure an efficient and compliant loan process:
- Loan agreements
- Meeting motions
- SFO payment schedules
- Disclosure notices
- Execution-ready document packs for committees and owners
Everything is delivered clearly, accurately, and on time.
Levy Calculations, Credits & Scheme Financial Setup
Firstrata manages the full establishment of the Hybrid Loan and provides all financial calculations and guidance required to set it up correctly within the scheme’s accounting system. This includes:
- Preparing loan levies, repayment schedules, and SFO credit calculations
- Drafting motions for adoption at general meetings
- Investing in leading strata software platforms to automate Hybrid Loan establishment
- Developing user guides and working directly with major strata software providers to ensure levies, credits, and loan structures are entered correctly
- Equipping strata managers with everything they need to implement the loan from day one
This removes guesswork and ensures all levies and credits are entered accurately
Ongoing Loan Administration & Ledger Management
Once the loan is active, we support strata managers throughout the entire term:
- Maintain comprehensive loan ledgers for each building
- Issue monthly summary journals for managers to process
- Track repayments, interest, SFO allocations, and loan balances
- Coordinate with building treasurers and committee chairs
This ensures clean, audit-ready financial reporting.
Strata Auditor Support
We work directly with your auditors to make year-end effortless:
- Provide strata auditor training sessions with hybrid loan accounting user guides
- Provide all loan statements and ledger summaries
- Assist with reconciliation queries
- Ensure levy and interest allocations match statutory requirements
This eliminates back-and-forth and speeds up annual reporting.
Disclosure Certificates & Lender Documents
We provide loan disclosure certificates and supporting documents whenever lots are bought or sold, ensuring smooth settlement and full compliance with state-based legislation.
Download Your Resources
Hybrid Explanatory Paper
E-Brochure
Call The Team
Real World Examples
Hybrid Loan Frequently Asked Questions
GENERAL
| What is the benefit of a Hybrid Loan? | The Hybrid Loan allows some owners to pay their share of a project cost as a lump sum, avoiding paying interest on a loan, whilst other owners pay their share of a project cost over the life of the loan. |
| Briefly, how does it work for the OC/BC? | The OC/BC borrows money from Firstrata and from SFOs of an amount required to fund the loan purpose, typically for project works. The total loan levies charged is based on the Total Loan Amount, and those owners who do not pay upfront are required to pay the loan levies whilst those owners who do pay upfront (the SFOs) are not required to pay the loan levies because of the SFO Levies Credit they receive. |
| Can the OC/BC repay the loan early if it wants to? | If the interest rate on the Firstrata loan is variable the loans can be repaid early without penalty. |
| Is the interest rate fixed or variable? | The interest rate is variable. |
| What happens if the OC/BC receives a windfall gain? | If the OC/BC receives funds from sources other than from owner levies, whether arising from proceeds of insurance recovery, successful litigation, government grants or for any other reason, if these funds are to be utilised to repay debt then the repayment is applied to ALL loans in equal proportions, e.g. if 25% of Firstrata’s loan balance is being repaid early, then each of the SFOs has 25% of its loan balance repaid at the same time. |
| Can the OC/BC establish more than one Hybrid Loan or Standard Loan for different project components? | There is a limit of one Hybrid Loan per OC/BC at any one time, but multiple standard loans can be utilised in conjunction with a Hybrid Loan. |
| Does the Strata Manager receive commission? | Firstrata does not pay commissions or provide other benefits to strata management firms as compensation for this loan being provided. |
| Can an allowance for variations be included in the amount borrowed? | Yes, Firstrata typically includes an allowance for variations for unforeseen expenses that may arise during the project works. |
| Can the Hybrid Loan be used as a line of credit? | The Hybrid Loan is an amortising loan product, not a come-and-go line of credit facility, albeit it allows for multiple progress draws. |
| If there are many owners that want to pay up front, does that affect anything? | There is no limit to the number of SFOs, subject to Firstrata’s minimum and maximum loan size thresholds. |
| If we don’t need the full loan amount, what happens with the Firstrata loan? | There is no penalty for not using the full loan amount. The strata manager should contact Firstrata when no further loan funds are required, and appropriate arrangements can be made to commence principal and interest repayments to repay the loan over the remainder of the loan term. |
| If we don’t need the full loan amount, what happens with the SFO loans? | If the full amount is not required, any surplus funds residing in the SFO Trust account will be returned to the SFO to a bank account nominated by each SFO. |
SFO SPECIFICS
| An SFO pays their proportion up front, so does this mean they will not have an increase in strata fees – that is, no additional costs / payments? | Each SFO will be charged Loan Levies to pay for their proportion of the loan repayments, but these levies charged will be offset by the SFO Levies Credits each SFO is allocated. There are no additional costs or payments for SFOs pertaining to loan repayments. |
| Are SFOs responsible for the interest on the Firstrata Loan? | All lot owners are legally responsible for all loan repayments made by the OC/BC. The general commercial effect of the Hybrid Loan is such that the proceeds from the loan levies paid by the non-SFOs are utilised to meet the Firstrata loan repayments. |
| How and when do the SFOs pay their money, and how do they know how much to pay? | After executing the SFO Agreement, each SFO will be issued with a Call Notice document that stipulates the amount due, the BPAY details for the SFO Trust and the due date. The due date for payment will be as determined by the Committee and/or Strata Manager. |
| What is the SFO Trust and why is it used? | The SFO Trust is utilised to provide greater protection of funds for SFOs and to simplify the administration activities for the Strata Manager. SFOs pay their money into the SFO Trust that is administered by Firstrata, and where the SFOs are the beneficiaries of this Trust, i.e. the SFOs have legal claim to their monies in this Trust, and where Perpetual controls the SFO Trust bank account. Funds received into the Trust from the SFOs are released to the OC/BC when Firstrata receives a Drawdown Notice from the OC/BC. |
| Can an SFO sell their apartment with the loan attached so that the incoming purchaser only needs to pay normal levies? | Yes, the SFO Agreement provides for the automatic assignment of the benefits of the SFO Loan to the incoming purchaser, meaning the incoming purchaser does not need to pay loan levies. |
| Can an incoming purchaser be an SFO? | The opportunity to become an SFO only exists for those owners when the Hybrid Loan is established. |
| What happens to an SFO if there are significant defaults on the loan by non-SFO owners? | There are two distinct relationships: the first between Firstrata and the OC/BC, the second between the OC/BC and the owners. The non-SFOs do not default on the loan per se, rather their obligation is to pay levies to the OC/BC which, on occasion, may not be paid on time. If a significant number of non-SFOs have levies arrears, this could result in the OC/BC having a shortage of cash with which to repay the Firstrata loan. The working capital facility can be utilised to cover this temporary cash shortage whilst the OC/BC takes action to recover the outstanding levies, noting that the process to recover outstanding loan levies is no different to the process to recover outstanding administration levies or sinking fund levies. If the OC/BC does default on the loan repayments to Firstrata, Firstrata has the right to enforce the loan agreement with the OC/BC, which may include accelerating the action by the OC/BC to recover outstanding levies from non-SFOs along with raising additional levies from all owners to cover the cash shortfall. |
LEVIES
| Do all lot/unit owners pay levies in respect of the loan? | All lot/unit owners are charged Loan Levies by the OC/BC in accordance with the lot/unit owner’s percentage share of the OC/BC. SFOs are charged Loan Levies in accordance with their lot/unit entitlement percentage, but these levies are offset by the SFO Levies Credits allocated to them in accordance with the terms of the SFO Agreement. Non-SFOs are charged Loan Levies in accordance with their lot/unit entitlement percentage and must pay these levies in the normal stipulated timeframe. |
| Can levies that need to be raised to repay the loan be adjusted to smooth out year on year variability e.g., higher levies during the initial Interest Only period? | Levies associated with the loan must be struck at an amount equal to the expected loan repayments to be made by the OC/BC, which once the loan is fully drawn will be consistent for each quarter thereafter. |
| How do we know what the levies amount should be? | Firstrata will calculate the total Loan Levies based on the expected loan repayments, taking into consideration the Firstrata interest rate and loan term, Firstrata Loan Amount and Total Loan Amount, and, if it is a progress drawdown loan, taking into consideration an estimate of the timing and amount of loan drawdowns during the first year. |
| What happens if the approved Loan Levies differ from the actual repayments (e.g. if interest rates change) | Firstrata keeps a ledger of all levies charged and all loan repayments, allowing it to automatically calculate any difference that may arise during the year. During the final year of the loan term, or earlier if requested by the Committee and/or Strata Manager, Firstrata will calculate the levies to meet the expected loan repayments in the final year plus/minus any difference between the previously approved Loan Levies and actual loan repayments up to that date. |
| Who looks after the Loan Levies? | Firstrata calculates the Loan Levies and provides these to the Strata Manager for the owners to approve and for the strata manager to load into the strata software system. The Loan Levies are included on the same (typically quarterly) levies invoice as the Admin Levies and Sinking Fund / Maintenance / Capital Works Levies. If a non-SFO doesn’t pay its Loan Levies on time, the Strata Manager can and will take action to recover the outstanding Loan Levies in just the same manner as the Strata Manager would take action to recover any outstanding Admin Levies and/or Sinking Fund / Maintenance / Capital Works Levies. |
| What happens if a lot/unit owner does not pay its Loan Levies? | If any lot/unit owner is late in paying its levies, regardless of whether the levies are Administration Levies, Sinking Fund Levies or Loan Levies, the OC/BC has many remedies available to it, including but not limited to charging interest on overdue amounts, taking enforcement action to recover the debt and if required ultimately seeking a judgment from to the court to take possession and seek to have the lot/unit owner’s apartment sold, from which the outstanding levies are recovered from the sale proceeds. The Working Capital Facility offered by Firstrata can provide additional short-term funding to the OC/BC to cover any cash shortfalls arising from Loan Levies not being paid on time. |
INTEREST & FEES
| Does Firstrata charge/receive interest on the loans provided by the SFOs? | Firstrata does not charge nor receive any interest on the loans from the SFOs to the OC/BC. |
| Is there compound interest? | Interest is charged to the OC/BC loan account each month, and to the extent that the loan repayment is made at or before the scheduled time, then no compound interest will be applicable. |
| What happens if the interest rate changes, will SFOs have to pay increased levies? | Any change in interest rate on the Firstrata loan will have no commercial impact on the SFOs. Each SFO will continue to receive an SFO Levies Credit that offsets the Loan Levies amount they are charged. |
| What fees apply to a hybrid loan? | There is an Establishment Fee of 0.50% of the Total Loan Amount. This fee reflects the time and cost in establishing the SFO loans and managing the SFO loans over the full loan term. If an early repayment of the loans occurs and funds are returned to SFOs by way of payment to an SFO’s nominated bank account, a fee of $100 per SFO applies. |
| What fees apply to the Working Capital facility? | An annual fee of 1% of the facility amount applies, and a fee of $100 per drawdown is payable. |
| What fees apply to the SFO Trust? | Firstrata charges the SFO Trust a trustee fee of 1.30% per annum of the bank balance in the SFO Trust. This fee covers Firstrata’s cost of operating the Trust, including the calculation and disbursement if applicable of interest to each of the SFOs. Additionally, an administration fee of 0.20% per annum of the bank balance in the SFO Trust is charged to cover all the external costs of operating the Trust e.g. audit fees, custodian fees etc. These fees are not paid by the OC/BC. |
TAXATION
| What are the tax consequences of the hybrid loan product? | Each lot/unit owner should speak to his or her tax advisor about its specific circumstances, as Firstrata cannot provide tax advice. |
| If I am an SFO and earn interest on my funds in the SFO Trust, will this be taxable? | Any interest that may be earned by an SFO on the balance of their funds in the SFO Trust may be paid to each SFO as a distribution of the SFO Trust. Each lot/unit owner should speak to his or her tax advisor about its specific circumstances, as Firstrata cannot provide tax advice. |
LEGAL
| What happens if a lot/unit owner does not pay its Loan Levies? | If any lot/unit owner is late in paying its levies, regardless of whether the levies are Administration Levies, Sinking Fund Levies or Loan Levies, the OC/BC has many remedies available to it, including but not limited to charging interest on overdue amounts, taking enforcement action to recover the debt and if required ultimately seeking a judgment from to the court to take possession and seek to have the lot/unit owner’s apartment sold, from which the outstanding levies are recovered from the sale proceeds. The Working Capital Facility offered by Firstrata can provide additional short-term funding to the OC/BC to cover any cash shortfalls arising from Loan Levies not being paid on time. |
| Does the hybrid loan conform with relevant legislation? | Yes, Firstrata has obtained legal advice from law firms in each state and territory in which it operates confirming that the design and operation of the hybrid loan product is in accordance with relevant legislation. |
| What if there is a default on the loan? | The rights of Firstrata and of the SFOs in the event of default on the loans are stipulated in the loan contract and SFO agreement noting that Firstrata and the SFOs rank equally in their claims against the OC/BC. |
| Will there be any evidence of an SFO loan on individual title? | The SFO loan is between the entity that owns the lot/unit (you as an individual/s, company, trust etc) and the OC/BC. Nothing is noted against the lot/unit. The SFO loan is an asset of each SFO, not a liability. |
| What are the key loan terms? | The key loan terms of the Firstrata Loan are stipulated in the loan documentation, including loan amount, interest rate, length of loan, repayment frequency etc. |
| Can any owner be an SFO? | Yes, unless they are a regulated lender under the provisions of the National Consumer Credit Protection Act 2009 (Cth). |