Line of Credit type loan on PPOR - retiree, 70s

Discussion in 'Loans & Mortgage Brokers' started by Old bloke, 8th Jun, 2022.

Join Australia's most dynamic and respected property investment community
  1. Old bloke

    Old bloke New Member

    Joined:
    8th Jun, 2022
    Posts:
    2
    Location:
    Canberra
    New member (mid 70s) here seeking loan advice please on long term LOC type loan.

    Current situation - $300k remaining on big4 bank P&I capital city PPOR home loan 4% (soon to increase by 0.5% given RBA cash rate increase 7 June), 20 years remaining nominal term, loan debt fully matched by funds in 100% offset account, monthly payments continuing at about $1700 from offset account so loan amt outstanding will decline and loan is likely to be cleared in less than 20 years; LVR less than 10%; very unlikely to downsize current PPOR; lifetime indexed pensions $140k annually after tax

    Objective - arrange economical long term access now to suitable loan to enable borrowing up to 500k when needed for BOMAD, major repairs, residential aged care deposits etc; want to set something up now and avoid having to arrange reverse mortgage or other loan at short notice when we are in our 80s.

    The current arrangement using a conventional home loan matched by 100% offset provides flexible access to funds but the loan is running down quickly given that monthly repayments are set at a level that ignores the offset balance. We know that borrowing over 70 is difficult but ideally we would like to restructure either to (a) a conventional P&I home loan with 100% offset, with ability to have monthly repayments decreased to take a/c of amount in offset; or (b) a conventional IO home loan with 100% offset or (c) long term LOC secured on PPOR (happy to pay a modest LOC annual access fee)

    Yes, it is a first world problem, and we are in a very fortunate position comparatively, but any advice would be appreciated
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,673
    Location:
    Australia wide
    It would likely be a breach of the NCCP act to lend under such circumstances.

    have you got an income?
     
  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,546
    Location:
    Bella Vista
    Scenario

    A - depends on servicing, some maybe be more harda33 then other with lending based on your age.

    B- most banks don't like IO on OO properties, some don't mind as long as theres a good exit strategy.

    C -LOC don't really exist anymmore.
     
    Last edited: 8th Jun, 2022
  4. Old bloke

    Old bloke New Member

    Joined:
    8th Jun, 2022
    Posts:
    2
    Location:
    Canberra
    Fortunately yes super income is secure (as mentioned in post)
     
    Terry_w likes this.