LOC for Bills/Maintenance

[Brett IP]

Happy New Year to all, first post of 2011.

Just a quick one, do many people here use a LOC to pay for Bills such as Rates, Insurance and all maintenance to preserve their cash? I know some capitalise interest also, but im looking at setting one up to pay for everything other than interest.

That way I dont have to necessarily "budget" for bills, I can just use the LOC & keep all my money on the PPOR.

How do you pay bills etc from a LOC, is it just like a Bank account?
Sorry, just new to the LOC side of things.

 

[mary&mat]

Hi Brett,

Yup, we do this with our LOC; we also capitalise interest.

Use it just like a bank a/c & pay bills from it online.

 

[MFG]

interesting question.

i have been using it only to service the interest repayment for my loan.

i will start using it to pay off rates and water bills from now on.

cheers,
Scott

 

[Pa1nter]

In my case each property has a special LOC account and all incomings and outgoings are paid through it.

Therefore each property has its own bank statement with all transactions and interest on it.

If I can pay something via credit card to collect points in relation to the property,I do that and then direct debit it back into the card account two days before it is due out of that particular property account.

 

[Brett IP]

In my case each property has a special LOC account and all incomings and outgoings are paid through it.

Thanks Pa1nter & mary&mat

I gather you only pay the interest on the LOC off & not the whole amount, so that the debt on the IP grows?

 

[mary&mat]

Hi Brett,

We only pay the interest on the portion of the LOC we have used.

We intend to never pay it off so yes, the debt grows.

Hopefully our property grows faster in value & as the years go on, inflation will 'erode' some of the LOC debt.

Regards,
M&M

 

[Doovalacky]

If I can pay something via credit card to collect points in relation to the property,I do that and then direct debit it back into the card account two days before it is due out of that particular property account.

Closest match I found in search.
Set up a LOC against my PPOR to cover finishing of Duplex construction. Expect to pay it off in 6 or so months but doign it this way avoided LMI while giving me some long term flexibility.

If I purchase say curtains on my CC card for the IP can I just transfer money from the LOC to cover that amount with out contaminating the LOC interest? Or do the expenses have to come straight out of the account.

 

[Pa1nter]

Closest match I found in search.
Set up a LOC against my PPOR to cover finishing of Duplex construction. Expect to pay it off in 6 or so months but doign it this way avoided LMI while giving me some long term flexibility.

If I purchase say curtains on my CC card for the IP can I just transfer money from the LOC to cover that amount with out contaminating the LOC interest? Or do the expenses have to come straight out of the account.

I am not an expert and others on here are much more legal minded than myself,so take what I say as my opinion only.

Is the LOC in a separate account dedicated to the Duplex construction?
If this is the case,I believe you can pay that exact amount back into the credit card.You will not be able to claim the interest from the credit card purchase because it is muddled up with private use,
The purchase would not actually take place until you pay it from the LOC.Make sure you name the transfers clearly.

 

[Pa1nter]

Thanks Pa1nter & mary&mat

I gather you only pay the interest on the LOC off & not the whole amount, so that the debt on the IP grows?

I actually pay lots more than my interest into the LOC and this builds up and becomes a good buffer for when I need it for some reason.
This is my way to force save and have cash for another purchase in the near future or if disaster strikes my way.

 

[Doovalacky]

Is the LOC in a separate account dedicated to the Duplex construction?
.

Yes completely separate. Just needed a bit more cash to allow for the fittings and I didn't want to X-col my PPOR into it.