Hi Guys,
I know the post below mine is about "LOC" but had a query!
Okay… i want to pull a "Line of Credit", only $20,000 to have as "emergency" money or money just sitting there for small things that come up. For example, thinking of buying a small car, going overseas, doing some reno's etc.
I'm scrupulous, so i'm not going to pull a line of credit for $20k and blow it – but i just wouldnt mind having it there.
Someone put it to me that a LOC is just like a Low-Fee credit card, interest only charged on what you spend etc and money there if you need it!
So… my question. My "security" property is with ING and i spoke with them. They don't have a LOC as such, but said that another Mortgage Simplifier loan as a redraw is exactly the same.
So anyway – i got the loan documents sent to me and was curious. They said its $400 bucks or so in fees (which is OK) and then, 780 repayments of $50.06. I questioned this and they said, that's calculated that presumably, they offer me $20k and i take it and spend it… but if it just sits there, it won't get charged as this?
They then said, the only difference really is that a Traditional bank LOC is revolving (forever) where as ING basically give you 30 years to pay it off.
What i want to know is the following: If i get this 20k LOC, and just let it sit there, not using it- will it cost me anything? If i then spend say $5k, i'll have to repay fair enough – at their rate of 5.09%…
But i was told that if i spend say $5k, to quickly get the $5k back in there, so the interest doesnt get charged?
So, becasue this is a Mortgage and not a LOC – do ING penalize or charge for moving money back and forth back and forth.
Ideally, i'd love to have a situation of $20k sitting there. Then something comes up, spend 5k and interest starts getting charged as expected… but then i work and save, move the 5k back and it reverts to no interest being charged?
Any light on this would be great?
Thanks all you experts
JR
You could do this, however, the simplifier will have a set term for IO ( say 5 years ) – check with ING to be sure.
After 5 years, your repayments will revert to P&I , so even if you have nothing owing, you will need to make a repayment.
Check redraw fees for taking money in and out. If I recall, it is free, but best to check before you do it.
Thanks St George Dragon…
My question is though that i actually don't want to use it for other investing… i want it as "cash" sitting there in case i need to buy a car, go on holiday etc…
In other words, i'd preferably use my own cash to do these things as they arise… but from time to time i wouldn't mind having access to funds at a good interest rate such as the mortgage simplifier.
So i need to find out… a) if i move money back and forth (say spend 5k of the 20k, then 2 weeks later, repay the 5k, so the balance is still 20k) – will there be a fee?
If i do the above, say all the time over the 30 years, what fees?
To discharge the loan – say, the balance is still 20k (I havent touched it) but then want to close it – what fees etc?
I initially thought it was as simple as having 20k sitting there to be redrawn, get charged interest on what you've used, nothing if you dont
Regards
Hi Energy4anarchy,
ING do have a proper LOC account.
From what you have said, I beleive your better option would be a LOC.
The ING LOC is referred to as a SMART Home Loan. This product does not have an application fee but does have an annual account keeping fee of $180.
The minimum loan amount for a SMART Home Loan and the Mortgage Simplifier Home Loan is $50,000.
There is no restriction to how you operate a SMART Home Loan as far as repayments and withdrawals are concerned.
Hope this helps.
Regards.
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