I’m all sorry if i asking a question thats been asked 100’s of times before. i’ve been wanting to get into this for a while, so i talked to westpoint who happened to come by my door and they where talking about getting a line of credit loan, i’m only 24 have have no exp in this field i have 100k in equidy and not shore if getting a line of credit or a second lone for an ivestment property is the way to go.
Thanks for your help
David
The newest member
LOCs are good, but can sometimes have higher interest rates.
I don’t know who Westpoint is, but there are a number of companies out there that setup these LOCs and charge a very high fee for doing so. So make sure you research thoroughly.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Is there a site to see if there are any complaints agaist a company
have you checked out http://www.westpoint.com.au ? sounds like it could be them
Yes that is them but there have been wanting to sign me up to a line of credit package with anz at 6.47% but a lot of people i’ve spoken too (all of then are my age) say line of credit is a bad thing and im just not shore. im just trying to find out your experiences with them if you use them. do they actually reduse the time it take to pay off a house?
thanks again
line of credit ain’t bad, but you have to use it for the right things… don’t blow it on trinkets and spur of the moment stuff (ie big screen TVs)… use it to invest and you’ll be okay…
As richmond said, LOC’s are fine and very convenient to use for investment purposes (deposits, emergency funds etc.). The problems usually happen when they are used like a big credit card for non investment purposes – cars, boats, tv’s – “equity mate” if you know what I mean.
regards,
Rod
Originally posted by Mad-Cat:I’m all sorry if i asking a question thats been asked 100’s of times before. i’ve been wanting to get into this for a while, so i talked to westpoint who happened to come by my door and they where talking about getting a line of credit loan, i’m only 24 have have no exp in this field i have 100k in equidy and not shore if getting a line of credit or a second lone for an ivestment property is the way to go.
David,
The important question here is, do you need a line of credit?
There are other products available that may be better suited to your individual needs,
Research all available options before you commit to anything.Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
My first advice for anyone thinking about a line of credit is how disciplined are you with your income/spending/saving? Lines of credit were initially designed as wealth creation tools. Investors would set up a LOC (line of Credit) so that they could access funds for shares, property, bullion, collectables etc.
I would suggest you might want to set one up to use for the deposit, fees and charges to buy another property. Set it up as a separate subaccount or loan from your own home loan (if you still have one). This will ensure you keep personal debt separate from investment debt and your accountant or tax agent can see what interest you paid as interest paid on investments is tax deductable but for personal it is not. By only using the LOC to provide funds for the deposit etc you are able to make it stretch further and may be able to buy more than one property. Think of the LOC as your working account for investing. For the balance of the purchase I would look at a basic no frills or fixed loan so you know what payments you are up for each month verses income. All income from you investment property can go towards paying off your own home loan and reducing non tax deductable interest. This is only a brief outline but I am happy to send you some more info that I have put together for some of my clients.Hope that gives you a brief outline. Regards Tina (mortgage broker).
How about instead of a line of credit facility you have 2 accounts setup, a loan facility forsay $200k and thats for the purchase of the property and a $50k line of credit account that all bills come out of and all funds go into so if you are a little short for those quarterly rates or unexpected maintainance issues get paid immediately(happy tradesmen) and you pay it off into the LOC when possible.
Again it is a dicipline thing for yourselkf as so many here have rightly stated, but it is your control with the main loan as a standard rate loan and a higher loc interest rate on a smaller manageable amount. For a young property investor this would be a great starting point.
Just my 80c worth
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Wow
what a reply seem there so many options out there and there is no black and white answer. thanks everyone for you imput its been a great eye opener
Thanks
Dave
ANZ is one of the best and cheapest LOCs available, so they are not trying to rip you off with an inferior product with high interest rates.
the danger with LOCs are some people have these on investment properties and then put all of their salary in, and take it out again. The ATO considers it to be a repayment when the money goes in and a reborrowing when it comes out. So the itnerest on the component withdrawn will nto be deductible.
Other people also have problems because – having all that money available for use means they spend it, waste it on consumer items etc. So their loan never gets paid off. Some of my friends are like this. So these sorts of people would be better off on a normal loan.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
the danger with LOCs are some people have these on investment properties and then put all of their salary in, and take it out again. The ATO considers it to be a repayment when the money goes in and a reborrowing when it comes out. So the itnerest on the component withdrawn will nto be deductible.Yes this a trap. This is where an offset account is often a better way to achieve a similar result.
Rod.
I agree with you Rod,
Structured correctly, a 100% offset offers less risk & can be more economical when compared to a LOC.Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
ok its not a good idea to have a loc on a investment property but dose it work that way if your residential mortgage. is there much of a difference between loc and a 100% offset account.
100% offset can work very well if you ever move out of your home. Just pay the minimum off you home loan/interest only and plough all of your money into the offset. This will have the same effect as a LOC, but probably at a cheaper rate. Then if you move out, you just take the money out of you offset and plonk it into the new offset attached to your new home loan. The result is the interest on your old loan goes up and interest is saved on the new one = massive tax benefits.
This wouldn’t work with a LOC as the money would be coming from the loan account = borrowing, and since it si being used for non investment purposes, the extra interest would not be claimable.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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