Property Line Of Credit

Using a Property Line Of Credit as your home loan or for investment purposes can be an excellent way to go, particularly if your income is exceeding your expenditure comfortably.

A property line of credit is the most flexible loan structure and allows for extra payment and or redraws with minimal cost and inconvenience. With most banks the access to your funds is as easy as writing a cheque or making an internet transfer.

Similarly making extra repayments can be done via over the counter deposits, direct deposit or full salary crediting.

Full salary crediting is my preferred option and I normally recommend this to my clients to give them the greatest benefits from their property line of credit.

The way this works is by using a credit card to put all of your monthly expenses on. You can use a Debit Card when there are cash expenses. I always arrange for my clients to choose the automatic credit card sweep at months end so that you don’t either forget to pay or get behind.

This is a critical point and can be a downfall in this type of facility. If you have difficulty in controlling credit cards and making sure they are paid off in full every month, then I would not recommend a property line of credit.

What we are achieving is to put all of your income into the loan, while keeping as much of your expenses out of the loan for as long as possible. The end result is that the bank is calculating its DAILY interest on a smaller balance and you pay less interest!

What that means is that while you are paying less interest, you are paying off your home loan at a faster rate.

Then you can start using the equity you have in your home to perhaps consider buying an investment property or even 2…

Here is an article on  “how to use your property line of credit for investing in property“.