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LOC process

Discussion in 'Property Finance' started by pippen, 10th Jan, 2017.

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  1. pippen

    pippen Well-Known Member

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    Hi peoples, i have a query in relation to securing a line of credit with my banking institution.

    Paid off my ppor worth around 350k ish and have $500 dollars remaining on the loan as direct debit is cancelled and no offset only redraw facility which i have never used and never will!

    How do i go about obtaining a LOC in investing in LIC's during market downturns?

    What are some things to ask the branch officers in relation to IO and paying it down?

    I am not looking to use an astronomical amount maybe 50k to 100k depending on the circumstances and this will only be in extreme events! Any links or other threads or ideas on this topic would be greatly appreciated!

    Cheers
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you paid the loan down to around $10, then redraw as much as you need for the ETFs the loan will be deductible due to new purpose. If you want to change the loan to IO it will depend on lender policy - may be a form or full application.

    If you do want to change product to a loc, it may also be a form or a full application, it will depend on lender.
     
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  3. pippen

    pippen Well-Known Member

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    I was always under the impression i would have to set up an additional loan? So long as,i use the redraw funds for investment purposes the interest should then be fully tax deductible?
    Instead of buying a bigger car, boat etc etc!

    My partner is on the loan title too and she is a lower income earner atm whilst i am on a higher income bracket will this influence future interest and tax issues?
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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  5. Terry_w

    Terry_w Well-Known Member Business Member

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    If you want to set up a LOC you would need to apply to your lender and provide updated payslips etc.
     
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  6. pippen

    pippen Well-Known Member

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    Jus got off the phone with branch officer they were keen on putting up a margin loan (tassie banks!), however viridian loc is variable at 5.78% and they can refinance my home loan if i want it!

    Was just a quick touch base call will sort something out in the next 2 weeks.
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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  8. pippen

    pippen Well-Known Member

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    Cheers will definately look into that! You mention if i want it done properly? What exactly do you mean by this?

    Really appreciate your help on this matter! Will continue to read as much as i can on the topic to improve my knowledge in this area as it will be a long term venture!

    Cheers!
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    In my experience branch staff usually have no idea about tax issues, debt recycling, investing generally and can stuff things up - yours looks pretty simple though so probably no issues.

    On second read I noted the low loan amount, so the high LOC rate is probably better value than paying the $395 package fee and reducing it. My bad on that one. :)

    Depending on your long term plans, it may be worth looking at changing banks to a westpac or St G loan - these can transact directly out of the variable loans which will save you a bit rate-wise. Whether it's worth the hassle of an application is another question, however if you plan to do more long term it could be worth it.
     
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