Pulling out equity from dev : LOC vs. Refinance

Hypothetically, I build a 4 unit development that adds about 200k equity when completed. Is it better to refinance the units at the end of the build with a new updated valuation and pull the newly created equity out to fund other investments.

Or is it better to run a line of credit out of the existing loans?

I am not too sure what the difference would be, except the LOC would be at a higher interest rate.
 
Hypothetically, I build a 4 unit development that adds about 200k equity when completed. Is it better to refinance the units at the end of the build with a new updated valuation and pull the newly created equity out to fund other investments.

Or is it better to run a line of credit out of the existing loans?

I am not too sure what the difference would be, except the LOC would be at a higher interest rate.

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To access equity you would generally want to use a LOC. But first you need to uncross collateralise your loans if you are splittinng titles. Then you can set up a LOC - either with the same lender or with a new lender.
 
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To access equity you would generally want to use a LOC. But first you need to uncross collateralise your loans if you are splittinng titles. Then you can set up a LOC - either with the same lender or with a new lender.

Terry - Couldn't you access the equity by uncrossing the loans, which involves a revaluation? Then you could loan additional funds through the revaluation up to your 80% LVR (i.e. original LVR).
 
Terry - Couldn't you access the equity by uncrossing the loans, which involves a revaluation? Then you could loan additional funds through the revaluation up to your 80% LVR (i.e. original LVR).

Correct, that's the most streamlined method that we usually take when splitting up developments.
 
Hypothetically, I build a 4 unit development that adds about 200k equity when completed. Is it better to refinance the units at the end of the build with a new updated valuation and pull the newly created equity out to fund other investments.

Or is it better to run a line of credit out of the existing loans?

I am not too sure what the difference would be, except the LOC would be at a higher interest rate.

There is no difference, you're getting confused by terminology. What you're really wondering is what product is most suitable.

In most cases, a simple top up (increase) of the existing loan would probably do the job you want it to.

A refinance is when you move the loan from one lender to another.

A LOC is simple an ongoing interest only variable loan which tends to be more transactional than a regular interest only variable loan, and they usually charge you more. If you don't need the transactional features, a LOC often isn't necessary.
 
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