LOC - Rental property

Discussion in 'Loans & Mortgage Brokers' started by ACH123, 23rd Dec, 2019.

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  1. ACH123

    ACH123 Active Member

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    Gosford
    This may be a dumb question. Are LOCs available for existing investment loans on a rental property?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Yes they are, but why would you want one?

    They're so expense that a P&I investment loan is often going to have similar or better cashflow. I can't think of anything that you can do with a line of credit product that you can't do with a regular loan with an offset account.

    People seem to have this idea that a line of credit is some special sort of loan that just gives you access to money. It's a loan product with a couple of features. It's also more expensive and those features can easily be replicated with other products.
     
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  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    18th Jun, 2015
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    1,382
    Location:
    Sydney
    Not a dumb question but often people think a LOC loan is an equity when in fact its cheaper and better to set up a term loan IO loan with a linked offset. The loan is cheaper and cannot be closed at anytime by the lender.

    The important thing is to determine if you have the available equity. What is the approx value of the property and what is the current loan balance?
     
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