Line of credit

Hi can anyone tell me which one is better line of credit or using offset account for mortgage?

OFFSET!!!
It's money in the bank to use as you see fit and they can't take it away from you.
LOC's have terms, conditions, fees and restrictions, in many cases.
I vote for offset account.
The bank can reduce or revoke an LOC with a policy change, but cash in an offset account is cash in the bank.
 
Robs been around a while ;) and knowns what "repayable on demand" means.

In any case, IO with offset for Ips is a better tax proposition if set up and used the right way

ta
rolf
 
Nicely said Rob.

To add:

Generally speaking Interest Rates are higher for the priveledge of a LOC. The effect is the same.

Regards JO
 
OFFSET!!!
It's money in the bank to use as you see fit and they can't take it away from you.
LOC's have terms, conditions, fees and restrictions, in many cases.
I vote for offset account.
The bank can reduce or revoke an LOC with a policy change, but cash in an offset account is cash in the bank.

sorry just hi jacking your question as well, i have ppor on an loc, and have several investment props all standalone, which is the best way to go with regrads to the money in the loc, currently have 400K loc and have 60k left, which i'd like to use for investment purposes, don't want to get it mixed up for tax reasons??? any suggestions out there??:confused:

also i've read robs article with regards to cross coll and cba are offering me 100% if i cross coll, 95% with lmi or 80%. what are your thoughts on moving forward.
thanks in advance.
yorkie
 
Hi Yorkie

Couple of things

the 400 k loc, is it all deductible debt, or is some of it for PPOR use ?

On the xcoll bit..............all thats happpening with the 100 % lend is that u have the equity anyway.........sounds to me like you might be better set up with separate facilities. That being raise 20 % + costs from the existing props, then get an 80 % lend on the new place, separate to what u have already


ta
rolf
 
On the xcoll bit..............all thats happpening with the 100 % lend is that u have the equity anyway.........sounds to me like you might be better set up with separate facilities. That being raise 20 % + costs from the existing props, then get an 80 % lend on the new place, separate to what u have already

Knowing what I know now and applying the lessons I've learned over time, that's how I'd be doing it.
 
LOC or Offset

I never recommend an LOC, except for owner builders. Offset is the way to go as LOC is just like a big credit card and never seems to get paid off. I did have some clients who were to start a family in the near future so I fixed at 6.99% and had an Offset account attached. This gave them the best of both worlds and offer repayment security.
 
truth is the banks can probably do what they like

LOCs in general though are a bit more troublesome in that regard.

WBC for eg has a repayable on demand clause on theirs.................not good sport that

ta
rolf
 
Hi Yorkie

Couple of things

the 400 k loc, is it all deductible debt, or is some of it for PPOR use ?

On the xcoll bit..............all thats happpening with the 100 % lend is that u have the equity anyway.........sounds to me like you might be better set up with separate facilities. That being raise 20 % + costs from the existing props, then get an 80 % lend on the new place, separate to what u have already


ta
rolf


hi rolf,
the 400 k loc is ppor, but would like to use the 55 k for investment purposes.


with regards the xcoll could raise the 20% +costs but am hitting the serviceability wall.

cba are asking me to bring in a st george loan to reduce my lvr from 69% down to 45%. and then i'll be o.k, also sugeested a low doc fixed for 3 years at 5.93% which sounded not too bad.

currently have 1.2 million with cba, and 500k with westpac and 320k with st george( which i am doing top up to 375k- 80% of val 470k) at the mo.

just trying to keep moving forward but my self employed income has come down a bit this year due to doing reno's etc. tis a hard balance. (maybe i'm too aggressive, pushing too hard and fast??) my current broker has said no and i thought i would try direct with cba.

any thoughts are appreciated, thanks in advance.(ta rolf):)
 
3 year fixed lo doc at sub 6 % is pretty good

What Im having trouble with in this scheme of things is that if the comm thinks u are having servicing troubles on full doc, how will they fix this problem on lo doc ?


ta
rolf
 
3 year fixed lo doc at sub 6 % is pretty good



ta
rolf

hi rolf,

What Im having trouble with in this scheme of things is that if the comm thinks u are having servicing troubles on full doc, how will they fix this problem on lo doc ?


not too sure on that one, but this is what they've suggested so far??:rolleyes: will let u know in a few days......??? hopefully.
my broker so far has not been coming up with anything at the mo, just says i have to wait for 6 months til my wife go back to work after maternity leave, as the banks currently view her as been unemployed..... :(
 
cba are asking me to bring in a st george loan to reduce my lvr from 69% down to 45%. and then i'll be o.k, also sugeested a low doc fixed for 3 years at 5.93% which sounded not too bad.
(ta rolf):)

forgive me but quoting on a 3 yr fixed at <6% for new money is BS.
 
truth is the banks can probably do what they like

LOCs in general though are a bit more troublesome in that regard.

WBC for eg has a repayable on demand clause on theirs.................not good sport that

ta
rolf

Just curious, under what condition would WBC exercise this clause?
 
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