Using Credit line on portfolio

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From: Bill Smith


I am presently buying several properties and plan on using fixed interest on some and a creditline facility on the rest. If I set up a portfolio the creditline only works on one property and when that property is paid for the creditline stops and does not flow onto one of the other properties that I am using the credit line for. Is there any way to show the effect of a creditline over 2 or more properties?

 

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Reply: 1
From: Webmaster (Somersoft)


The credit line model that you are trying to simulate will work fine in the Wealth Builder part of the software, but it is constrained to using multiples of the same property (or projected versions in time). You will not be able to achieve that in the portfolio because there is no "connection" between the method of finance for each of different properties that make up the portfolio. In collating an I/O funded property into the portfolio, the program doesn't know that really you now want it to be part of the credit line. In the same way, two different properties in two separate files that are each taking all the spare cash through a credit line cannot easily be joined together without additional decisions being made on which gets funding in what priority.

The bottom line is that at the moment at least, it is in the too hard and complex basket. If the aim is to use the software for helping to make decisions, rather than to do your tax return, you can probably use the Wealth Builder as a guide to taking the next step. You simply have to decide on an average/typical property and then you can use the credit line in a realistic way.

 

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Reply: 1.1
From: Bill Smith


Thankyou for your reply.
My reason for asking is that I would like to know how many years it is going to take to pay off the loans that I have using the spare income that I have.
I thought that creating a portfolio would just add up all the income and expenses and if the income is greater show the results over "x" amount of years. Basicaly do a credit line over the whole portfolio. Even with fixed interest only loans on some of the properties those loans would be absorbed into your credit line as they expire.