Hi all
I have a question about borrowing against my home, and then using those funds for deposits and costs on investment properties, as well as other investments.
The question is this:
If my home is _fully owned_ (ie no non-deductible debt), is it better to borrow against it in the form of a Line of Credit, or an interest only loan with a linked 100% offset?
Advantages of a LOC:
– ongoing (subject to passing periodic reviews, I think) compared to 10-15 years for an interest only loan.Disadvantages of a LOC:
– could be more expensive than interest only (but with ANZ it’s the same rate)
– may be lower LVR (but this is not an issue if 80% or less is desired).Would like to hear others’ thoughts. Anyone else made this decision, ie type of loan to choose against the equity of a _fully owned_ home.
Thanks
An additional disadvantage of a LOC is that it is accessible like a credit card and some folks find it easy to keep at the limit.
Regards,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If you are good with the LOC and controllig your money, it is a great way to go. You have no non-deductible debt so don’t need an offset account. Just use the LOC for deposits and fees and get 80% I/O loans on your investments. Pump all money into the LOC to reduce debt unless you want deductions.
You are in a great position!
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