Using home as security to get 100% Loan - is this a bad idea?

Discussion in 'Loans & Mortgage Brokers' started by JMica, 15th Sep, 2015.

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  1. JMica

    JMica Well-Known Member

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    Thanks Cliff, I am just reading up about LOC now and the following particular paragraph concerned me..

    "It's important to note, however, that there are real risks involved in taking this product. For example, many LOCs can be called in (ie, terminated early by the lender with full repayment required)."

    Does that mean they can take back the money anytime they want.. Can anyone shed any light on what is meant by this ?
     
    JMica, 15th Sep, 2015
    #21
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    Technically a LOC can be repayable on demand.

    Therefore - a standard variable term loan with an interest only period will do the same thing with less risk.

    If you're unsure of any of this - find a decent broker/banker to sort it out for you.

    Cheers

    Jamie
     
    Jamie Moore, 15th Sep, 2015
    #22
    JMica likes this.
  3. Perthguy

    Perthguy Well-Known Member

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    This is how I set mine up. Standard variable loan against an existing property. Something to be aware of is that funds should be invested directly from the loan account and not disbursed through an intermediary account such as an offset account or savings account.
     
    Perthguy, 15th Sep, 2015
    #23
  4. JMica

    JMica Well-Known Member

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    JMica, 15th Sep, 2015
    #24
  5. Perthguy

    Perthguy Well-Known Member

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    Perthguy, 15th Sep, 2015
    #25
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    My experience is that LMI providers now have the best serviceability calcs than pretty much all the lenders that have a LMI DUA.

    Oddly enough, post APRA, I reckon its easier to get LMI at 88+ than its ever been..................

    ta
    rolf
     
    Rolf Latham, 15th Sep, 2015
    #26
    S.T likes this.
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