Hi I am paying off my primary place of residence & have set up a LOC on this property & used it to purchase an IP after 6 months I had the IP revalued & have set up a LOC on it so I can purchase more IP’s My question is that there must be a limit as to how many times you could do this as the interest repayments on the LOC’s would eventually get to the point where you could no longer afford to continue doing this, or would you refinance your loans to wipe out the LOC’s.
regards TerryM
sorry if Ive confused anyone.The only thing that confuses me is why on earth you are using LOCs. They cost too much in interest and ongoing fees and charges. You can do the same with standard interest only loans for a lot cheaper in most cases.
As to a limit to doing this, you are only limited by serviceability. As long as your income from work and rental income can meet the repayments, you can keep going.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential LinksI should have explained further, when I said that I have purchased an Ip using a Loc it was only used for the deposit & legal fee’s etc I have a standard interest only loan for that property.
I paid 235k for the property 6 months ago and had it revalued and the bank said that I can get 105k in a LOC from this property, if I use this as deposits for further properties should I refinance my loan to pay out the LOC so I dont have two interest payments per month.
This property is rented for $330 per week.thanks for your help
TerryMWhat you are asking does not make real sense to me. You seem to be wanting to get a LOC and then refinance another loan to pay the LOC.
The simplest structure is as follows…
Loan 1: Interest only loan with offset account for non-deductible debt.
Loan 2: Interest only loan for deductible property purchase price.
Loan 3: Interest only loan with redraw for deposits and other deductible expenses.I am not a fan of using a LOC at all unless you cannot find a loan with free redraw and the cost of redraw would cost more than maintaining the LOC (highly unlikely).
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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