Can anyone please provide feedback about these loans? Are they like a credit card where you are given a set credit limit, and then only pay interest on what has been drawn down from the loan? I understand the offset facility they provide, but was wondering about the limit. We are considering paying off our own PPOR loan worth $25,000 and setting up a LOC with a $40,000 limit. My understanding is that by paying off our existing loan with the LOC, we effectively would then owe the $25,000 on the LOC and pay interest on this amount only. We wouldn’t be paying interest on the whole $40,000 would we? Sorry if this question is simplistic.
Yes they are like a credit card where interest is paid on the amount drawn.
And like a credit card people misuse them to fund their lifestyle buying a 4wd and a big screen telly….
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
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.
Can I ask why you want to pay your PPOR with a LOC? Usually the IR on the LOC is higher, plus if your LOC is meant for investment purposes you could risk losing the tax deduction you can make on the interest as you have used it for personal use…
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