Hello Folks,
I was hoping someone could give me some advise with a line of credit loan that I recently got setup using the equity in my home. I own my home outright and got a LOC loan approved for 80% of the value of my property.
We are staring our IP journey and settle on an IP at the end of January. I am planning on using the LOC to pay 20% plus buying costs (avoiding LMI) and have secured a separate loan with another lender for the other 80%.
As we own our home outright and therefore have no other mortgage against it and have surplus cash in savings (more than the amount of 20% plus borrowing costs) then I wasn't planning on using our savings and instead drawing down from the LOC.
However I was going to park our savings in an offset account linked to the LOC (until we need it in a few years) and thereby effectively not pay any interest on what we initially draw down from the LOC account.
I asked our mortgage broker to find us a LOC loan with an offset facility. He picked the ANZ Breakfree home equity loan for us and arranged all the paperwork. He assured us it had an offset facility and told me to arrange for a transaction account to be setup and link it to the LOC.
However, when I went to the branch to setup the transaction account they said the LOC didn't allow an offset account to be linked to it. They also confirmed this to me on the phone too.
So my predicament now (as we settle at end of Jan) is that I don't want to use our own cash for the 20% plus costs but if I draw down from the LOC then I will be paying interest on the amount for 20% plus buying costs which doesn't make sense if we already have this amount of cash earning low interest in another bank account. How can I offset it so I don't pay any interest?
I believe the LOC is both a transaction and loan account in one facility so if I just put this cash into the loan account and withdraw it for personal use in a few years then I will be mixing investment and personal use in the one account which I was hoping to avoid.
I did notice that the ANZ breakfree pacakge has a split loan facility but not sure how to effectively use that for this situation.
Any advice on how best to set this up would be most grateful.
I was hoping someone could give me some advise with a line of credit loan that I recently got setup using the equity in my home. I own my home outright and got a LOC loan approved for 80% of the value of my property.
We are staring our IP journey and settle on an IP at the end of January. I am planning on using the LOC to pay 20% plus buying costs (avoiding LMI) and have secured a separate loan with another lender for the other 80%.
As we own our home outright and therefore have no other mortgage against it and have surplus cash in savings (more than the amount of 20% plus borrowing costs) then I wasn't planning on using our savings and instead drawing down from the LOC.
However I was going to park our savings in an offset account linked to the LOC (until we need it in a few years) and thereby effectively not pay any interest on what we initially draw down from the LOC account.
I asked our mortgage broker to find us a LOC loan with an offset facility. He picked the ANZ Breakfree home equity loan for us and arranged all the paperwork. He assured us it had an offset facility and told me to arrange for a transaction account to be setup and link it to the LOC.
However, when I went to the branch to setup the transaction account they said the LOC didn't allow an offset account to be linked to it. They also confirmed this to me on the phone too.
So my predicament now (as we settle at end of Jan) is that I don't want to use our own cash for the 20% plus costs but if I draw down from the LOC then I will be paying interest on the amount for 20% plus buying costs which doesn't make sense if we already have this amount of cash earning low interest in another bank account. How can I offset it so I don't pay any interest?
I believe the LOC is both a transaction and loan account in one facility so if I just put this cash into the loan account and withdraw it for personal use in a few years then I will be mixing investment and personal use in the one account which I was hoping to avoid.
I did notice that the ANZ breakfree pacakge has a split loan facility but not sure how to effectively use that for this situation.
Any advice on how best to set this up would be most grateful.