If I would I wouldn’t be asking you such silly questions?

From my understanding, you don’t necessarily need equity to setup a LOC. It just needs to be secured against your property?

The income from the ASX 300 investment will be used to reduce non-deductible debt.

Terryw wrote:
If they are the lender then they would actually be the mortgage manager, This would mean the loan is mortgage insured no matter what the LVR. This may not be a concern but if you are aiming for multiple properties it could restrict you.Rates will depend on the size of the loan some majors around 5.85%Also you could do this on your…[Read more]

Terryw wrote:
If it is a separate loan, the loc, then that is good. You must have equity to do this thenGood that they have a license too.But who is the lender? 6.6% is very high at the moment. I hope the main loan isn't a LOC.Not sure about the fees being deductible up front. Seek your own tax advice.

You mentioned you need equity to do this…[Read more]

There is no redraw against equity for the LOC in the investment property, which is great!

Thanks Terry.

Wealth Maker Home Loans is the lender I believe. Yeah it is higher by a few basis points, but I guess the investment will make up for it. What’s the going interest rate at the moment?

The investment component operates as a separate line of credit account so I guess that’s how its distinguished for the mixed purpose. Is that still a concern?

They have a credit licence and AFSL so it looks fine from that end.

I spoke to the broker and the fees are:
$2,950 product packaging fee (tax deductible)
$25 loan servicing fee (tax…[Read more]

Yeah I had a look and the fees are higher than for a standard loan product, but at least its all tax deductible. There a MER of 0.8% p.a on the investment. But I guess the gap protection is what appeals to me. The cost is $25 per $5000 that you borrow. So I was thinking about taking a loan of $500,000 so that’s $2,500 and that would cover me for…[Read more]

I gave them a call about this, however they have assured that it is a tax effective investment and operates as if the loan is being redraw and used to invest in the ASX 300.

I found the fees for gap protection, is $25 per $5000 in loan amount. I was considering taking out a $500k loan so thats $2,500. What do you think?