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Is using LOC for a deposit risky?

Discussion in 'Investment Strategy' started by Roshy, 2nd May, 2016.

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  1. Roshy

    Roshy Active Member

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    Hi All

    I recently revalued 2 properties and now I have access to 120k of LOC.

    Presently, I have little cash in the bank but my 'buffer' is mainly the 120k.

    If I use the 120k towards a deposit, how likely would a bank call in on that LOC?

    What other risks are there if I use LOC towards a deposit?

    Thanks!
     
  2. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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  3. Terry_w

    Terry_w Well-Known Member Business Member

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    Is the LOC at call?
    It would be very unlikely that the lender would call it in if you have used it, but a possibility that they would cancel any unused portion if they see you as a risk down the track.

    once you have used the LOC it would be best to convert it to a IO term loan - perhaps. This may help serviceability and give you a lower rate.

    Don't forget to unmix it when you get a chance.
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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