Confuse between the products.

[Superstitionist]

Hi,

Each time I read through the finance articles, I am quite confuse between the terms: Margin Loan, LOE, and LOC...

Can someone please point me to the right direction or gives me a brief explanation between the 3, thanks?

Cheers,

Super.

 

[alexlee]

Hi,

Each time I read through the finance articles, I am quite confuse between the terms: Margin Loan, LOE, and LOC...

Can someone please point me to the right direction or gives me a brief explanation between the 3, thanks?

Cheers,

Super.

Margin Loan: loan against shares and funds. Often have 'margin calls', which means if the LVR drops below a certain level you HAVE to contribute enough cash or other shares / funds to bring the LVR back up.

LOE: Living Off Equity, basically taking out a loan against existing properties, etc for living expenses. The theory is that if your properties, for example, grow by $150k a year and you draw down $100k a year, you can theoretically keep doing it until you die.

LOC: Line of Credit. An undrawn loan amount against your property. Kind of like a big credit card that is secured by the IP.
Alex

 

[Superstitionist]

Thank you Alex,

Is there any article or book that is explaining the LOE structure in details? Like how to set up, the pro and con, etc...

Once again, thank you.

Super.

 

[Glucose]

Dear Superstitionist,
There are quite a few threads on this subject. If you do a search you should find some very interesting reading.
Cheers,
Glucose.