All Topics / Finance / Looking for LOC gurus here

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  • Profile photo of jessmontjessmont
    Member
    @jessmont
    Join Date: 2004
    Post Count: 8

    Hi All

    I wish to do a LOC on my home for investing purposes ….. I know the forum has some excellent MB contributors and would appreciate some advice as to how to set up.

    I am thinking of investing overseas as well so would need not to have any hassles sending money over as a deposit.

    Thank you all for this great forum …… i am a bit of a “lurker ” do not really have the confidence to post.

    jessmont [biggrin]

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Jess,

    A LOC id as easy or hard to set up as your original loan.

    The easiest and cheapest thing to do would be to approach your original lender for the LOC. Either direct or thru a broker.

    All the best

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of chief007chief007
    Participant
    @chief007
    Join Date: 2004
    Post Count: 11

    hi jessmont,

    where are you based?

    Profile photo of jessmontjessmont
    Member
    @jessmont
    Join Date: 2004
    Post Count: 8

    Hi Guys

    Thank you for your replies. I am based in SYD.

    Currently I have a basic home home loan with Members Equity.

    I will probably look at approaching them direct. As i have never done this before I was wondering if any of the regular MB know of any great LOC products with good interest only rates.

    I basically understand how they work just need to really discuss what I want to do with a finance savvy person.

    Thks muchly [biggrin]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I just refinanced someone out of MB into the ANZ as they wanted a LOC, and MB were not willing to change things, or it was too hard for them.

    Depending on the amounts I think you will find ANZ or St George to be good for LOCs

    Terryw
    Discover Home Loans
    Parramatta
    [email protected]
    Sign up to my mailing list.
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    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Depending on your circumstances a split loan with a 100% offset account attached may be a more beneficial/cheaper option than a LOC.

    EG,
    Split 1 is your current debt (non-deductible debt) on you PPR.
    And split 2 is your interest only investment loan (deductible debt) Equity from PPR.
    The 100% offset is linked to split 1 (non-deductible debt)

    Cheers
    Steven
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of JamesMcJamesMc
    Member
    @jamesmc
    Join Date: 2006
    Post Count: 8

    Hi, I’m pretty new here.
    What is a ‘LOC’?
    Where can I find what all these abbreviations mean?

    Profile photo of mjbluuemjbluue
    Member
    @mjbluue
    Join Date: 2006
    Post Count: 14

    James, LOC is short form for line of credit. It is a flexible type of loan that allows you to draw down and repay at anytime.

    Jess, I’m also looking for an LOC at the moment. I’ve been looking at similar products by some of the banks. I decided against ANZ because they don’t allow sub limits. I think CBA Viridian LOC and St George portfolio loan are quite similar. Both offer discounts of around 0.7% but I guess they are negotiable.

    The most flexible product I came accross was NAB portfolio facility (I think its quite a new product) that allows sublimits and also allows a 100% offset savings account at the same time. Other banks seem to only offer either LOC or offset facilities but not both at the same time. Only thing is the NAB product annual fee is quite high at $550 although there is no further costs (i.e. no transaction, ATM, chaning of sub limit fees)

    I’m sure the MBs on this site will give you some more insight into the differences. Good luck!

    Cheers
    MJ

    Profile photo of grossrealisationgrossrealisation
    Member
    @grossrealisation
    Join Date: 2005
    Post Count: 1,031

    hi jessmont
    I might be out if my depth here as I’m not a guru.
    but my call would be to an off set account depending what country you are going to invest in.
    It will depend how you structure to do it.
    With an nab offset, internet banking structure,
    you can link both personal and business banking together and you get atm etc for free but just keep an eye on the loan limits as all are linked and even thou they are not cross collateralised they are from a computer banking point of view and also watch nab overdrawn procedures they charge 50.00 per cheque that is over drawn.
    This is a double edge sword and can be used to your advantage which I have used it for before.
    I have over drawn my nab account for 29days ( mustn’t go over 60 days) to the turn of 79k and payed the 50.00 over draw cost I have used this to secure a property (this money is unsecured and doesn’t need the usual mortgage docs).
    onces I secured the property got the lending to pushed on another property split loan revaluation via nab and then put the money back all with in the 60 days and at no cost except the 50.00 redraw exceed limit charge ( this you don’t wish to do to often but its is something that is very handy)79 k is a 10% deposit on 790k so is a nice A’s to have in your deck.
    mine was 79 k you can ask your bankers if and when you need it the amount you require.
    oh and yes you could use that money on a property in mogolia if you wanted as its cash.
    make sure you have done your exit to pay it back but it does give flex.

    oh and confidence only comes via posting more not less.
    Its very hard to burn you from behind a screen so post as much as you like and when I sail past next will answer your question if I can.
    My advice would be to talk to a local broker get there ideas and then formulate a plan and post questions on that plan or formulate it yourself
    investing out side of the country you reside most in is a very different market and does need alot more then just borrowing 100k and slapping it on a property in vanuatu.
    my .002

    here to help
    If you want to get involved in some of the projects I’m involved in email to [email protected]

    Profile photo of JamesMcJamesMc
    Member
    @jamesmc
    Join Date: 2006
    Post Count: 8

    Thanks MJ.
    Easy once one knows what things mean.

    Profile photo of mikeCmikeC
    Member
    @mikec
    Join Date: 2005
    Post Count: 24

    mjbluue I understand how a LOC works and I understand how an offset facility works but I have never used them together. Whats the benefit in haveing both??

    Mike

    Always Ready.

    Profile photo of mjbluuemjbluue
    Member
    @mjbluue
    Join Date: 2006
    Post Count: 14

    hi mike.

    I try to explain how I think it could benefit.

    Say, LOC is used for investment purposes. For personal purposes you don’t draw down on the LOC as the interest is not tax deductible.

    A savings account is maintained on the side of LOC to deposit salary and rent. Advantages are:

    1) the savings account can be used to meet non deductible expenses. When the savings balance grows you can elect to use savings to pay down LOC whenever you like. e.g. just maintain $5k in the savings account
    2) instead of interest capitalising on the LOC (i.e. paying interest from LOC), interest can be paid directly from the savings account. This would save continually monitoring sublimits breaches to when interest continually gets debited from LOC.

    Disadvantage is that you are losing the interest spread between savings and LOC. i.e. funds placed in LOC would save you 7% interest, instead you only earn 3% on the savings account.

    With a combined LOC and offset account, you can have a savings account on the side of a LOC and have that as 100% offset. In effect you don’t lose out on the interest spread + get all the above benefits.

    Just my take on it, welcome any thoughts on better structuring.

    cheers mj

    Profile photo of mikeCmikeC
    Member
    @mikec
    Join Date: 2005
    Post Count: 24

    mjbluue

    I have a good understanding of the combo now. Thanks for taking the time.

    Mike

    Always Ready.

Viewing 13 posts - 1 through 13 (of 13 total)

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