LOC question

[macdub]

Hi all,
I have my loan on PPOR set up as 50% LOC and 50% as standard fixed rate loan. The fixed rate loan is about to finish its term and I was just thinking of merging this to LOC and make one big LOC loan.

Is this possible and what are pros and cons of doing this?

I have one IP with fixed rate interest only. What will be the best loan structure if I want to acquire another IP in next one year or so.

thanks in advance.

 

[Shahin_Afarin]

Why a LOC and not a standard variable term loan w/ linked offset?

Most banks charge a premium for LOC products.

 

[Rolf Latham]

As an aside, im not a big fan of LOC products unless for specific purpose of capping interest ( or with some odd lenders to be able to "redraw").

Cost is a small isue , but the risk profile of an SVR vs LOC will become very apparent when we once again go through a cycle of tight money

At least one lender has a "repayable on demand" clause on their loc product.

ta
rolf

 

[Jamie M]

What is the purpose behind both loans? I assume their both non-deductible if you're considering merging them?

Agree with Shahin and Rolf - I usually recommend a standard IO loan over a LOC.

Cheers

Jamie