Hoping someone can explain to me how repayments on a LOC work. I have a LOC for $60k that I'd like to keep at $60k. For the last three months the interest repayments have been the same amount (about $266) so I've set up a direct debit to pay that set amount each month. However, this month I paid the $266 but have been charged $313. The balance is also going up. Should I now pay the difference between $266 and $313 to bring it back down? Is the amount payable determined by how many days are in the month? If this is the case am I better off waiting until the bank charges the interest and then making the repayment? Sorry if these are basic questions but am just trying to understand how this works. Thank you.
Yep interest on the LOC is charged daily so the monthly repayment will fluctuate depending on the number of days in the month. For instance, I have a $40k Cba LOC with repayments of around $250 p.m (sometimes more, sometimes less).
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie, that makes sense. Should I now pay the extra to bring it back down to $60k? At the moment I've set up a direct debit to pay it but in future am I better off waiting to see what the interest charge will be and then making the payment accordingly or just pay a bit extra each month?
I usually just have the $250 automatically transferred at the end of each month – it's a little bit more than is required so usually that LOC has a little bit available.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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