Line Of Credit Vs Borrowing more?
 

hey team, just after a little bit of advice, just thought id ask on here as im sure other have been in a similar boat. Im looking at getting a new car plus need to pay off a few small things. Now ive built up a bit of equity in my house over the last year and a half, (my house is worth probably 140-150k or so more then what i owe on my loan)

So was looking into getting a line of credit (or some banks call it a home equity loan) or either adding more funds onto my existing loan. Now im a little confused as to which way i should go, probably looking at borrowing another $30k, which path did you go down if you have done this? or which path is the better option? i know the fees are higher to setup the home equity loan, but you dont pay any interest until you actually borrow some of the money from the loan. Im with commonwealth bank if this helps. Searching the net so far hasnt really helped, any advice will be greatly appreciated.

PM sent

Please post info in the thread. There may be more people interested in this topic, other than the OP.
Cheers

Re-draw your existing loan?

Sorry to Hijack your thread dude,

BUT,
Yeah as Matty has highlighted, I for one am in almost the exact same situation and looking to do the same in next 1 - 2 months, so would love to hear peoples thoughts.. However I am with ANZ..

[B]**information edited so as not to be specific to the above member's case**[/B]

I work for the CBA in the Third Party Home Loans Sales Team (in English - loans sent to the Bank via a Mortgage Broker). I act as the Liaison between the Broker and the Bank for any product/processing enquires, as well as escalating urgent matters etc for finance/settlement approvals. [I][U]Any information i provide is of personal opinion only and will not apply in everyone's case, ie different product suit different people, its all about personal preference.[/U][/I]

My advice is as follows:

First question is if you hold a Wealth (CBA direct package) or MAV (broker introduced package). As this will change what fees etc you will be charged for either topping up your existing loan or opening a brand new Line of Credit

Personally i prefer the LOC idea (I have one myself for my car), as you can have your pay go directly into it and use it as your daily transactional account and have your home loan directly debiting from there also. That way everytime you get paid you're effectively reducing your overall loan balance, therefore paying less interest every month.

To be perfectly honest the only benefit of topping up your home loan is that the interest rate (assuming you have a Standard Variable Rate home loan) is always going to be 0.1% lower than a LOC will be. However with the LOC i find that being able to use it as your day to day account and your pay going directly into it etc is better than 0.1% less interest (escpecially only on $30K) [COLOR="Red"]- remebember this answer is only CBA specific, not sure about other banks/credit societies....[/COLOR]

Like i said give me call (pm for my number) if you want and i can look into it a little further if you are unsure of what product you currently hold etc.

Or if you prefer just give your Mortgage Broker a call and have a quick discussion with him/her if you want, im sure they would love to help.

Who knows if you speak to your broker and there might even be a better option out there other than CBA. Just beware if you do find a better product elsewhere and you decide to close your current home loan, if you have held it for less than 4 years you will be up for a $700 deferred establishment fee, as well as discharge fee's etc. Just weigh up the pro's and cons of each product and make your decision that way.

Flick me an email at [email]sam.zurzolo@cba.com.au[/email] if you want to know anything more, or if it's easier you can just PM me on here. Hopefully i have been some help at least

Cheers

Sam

[QUOTE=BLUES;499527]Re-draw your existing loan?[/QUOTE]

its abit hard to do that for me because my home loan is actually spread over 4 loans. incurring $50 each redraw, plus my redraw isnt up high enough for what i need.

[QUOTE=REXXXED;499532][B]**information edited so as not to be specific to the above member's case**[/B]

I work for the CBA in the Third Party Home Loans Sales Team (in English - loans sent to the Bank via a Mortgage Broker). I act as the Liaison between the Broker and the Bank for any product/processing enquires, as well as escalating urgent matters etc for finance/settlement approvals. [I][U]Any information i provide is of personal opinion only and will not apply in everyone's case, ie different product suit different people, its all about personal preference.[/U][/I]

My advice is as follows:

First question is if you hold a Wealth (CBA direct package) or MAV (broker introduced package). As this will change what fees etc you will be charged for either topping up your existing loan or opening a brand new Line of Credit

Personally i prefer the LOC idea (I have one myself for my car), as you can have your pay go directly into it and use it as your daily transactional account and have your home loan directly debiting from there also. That way everytime you get paid you're effectively reducing your overall loan balance, therefore paying less interest every month.

To be perfectly honest the only benefit of topping up your home loan is that the interest rate (assuming you have a Standard Variable Rate home loan) is always going to be 0.1% lower than a LOC will be. However with the LOC i find that being able to use it as your day to day account and your pay going directly into it etc is better than 0.1% less interest (escpecially only on $30K) [COLOR="Red"]- remebember this answer is only CBA specific, not sure about other banks/credit societies....[/COLOR]

Like i said give me call (pm for my number) if you want and i can look into it a little further if you are unsure of what product you currently hold etc.

Or if you prefer just give your Mortgage Broker a call and have a quick discussion with him/her if you want, im sure they would love to help.

Who knows if you speak to your broker and there might even be a better option out there other than CBA. Just beware if you do find a better product elsewhere and you decide to close your current home loan, if you have held it for less than 4 years you will be up for a $700 deferred establishment fee, as well as discharge fee's etc. Just weigh up the pro's and cons of each product and make your decision that way.

Flick me an email at [email]sam.zurzolo@cba.com.au[/email] if you want to know anything more, or if it's easier you can just PM me on here. Hopefully i have been some help at least

Cheers

Sam[/QUOTE]

A good reply in my book with sound advice. Well done.

[QUOTE=REXXXED;499532][B]**information edited so as not to be specific to the above member's case**[/B]

I work for the CBA in the Third Party Home Loans Sales Team (in English - loans sent to the Bank via a Mortgage Broker). I act as the Liaison between the Broker and the Bank for any product/processing enquires, as well as escalating urgent matters etc for finance/settlement approvals. [I][U]Any information i provide is of personal opinion only and will not apply in everyone's case, ie different product suit different people, its all about personal preference.[/U][/I]

My advice is as follows:

First question is if you hold a Wealth (CBA direct package) or MAV (broker introduced package). As this will change what fees etc you will be charged for either topping up your existing loan or opening a brand new Line of Credit

Personally i prefer the LOC idea (I have one myself for my car), as you can have your pay go directly into it and use it as your daily transactional account and have your home loan directly debiting from there also. That way everytime you get paid you're effectively reducing your overall loan balance, therefore paying less interest every month.

To be perfectly honest the only benefit of topping up your home loan is that the interest rate (assuming you have a Standard Variable Rate home loan) is always going to be 0.1% lower than a LOC will be. However with the LOC i find that being able to use it as your day to day account and your pay going directly into it etc is better than 0.1% less interest (escpecially only on $30K) [COLOR="Red"]- remebember this answer is only CBA specific, not sure about other banks/credit societies....[/COLOR]

Like i said give me call (pm for my number) if you want and i can look into it a little further if you are unsure of what product you currently hold etc.

Or if you prefer just give your Mortgage Broker a call and have a quick discussion with him/her if you want, im sure they would love to help.

Who knows if you speak to your broker and there might even be a better option out there other than CBA. Just beware if you do find a better product elsewhere and you decide to close your current home loan, if you have held it for less than 4 years you will be up for a $700 deferred establishment fee, as well as discharge fee's etc. Just weigh up the pro's and cons of each product and make your decision that way.

Flick me an email at [email]sam.zurzolo@cba.com.au[/email] if you want to know anything more, or if it's easier you can just PM me on here. Hopefully i have been some help at least

Cheers

Sam[/QUOTE]

Nice answer Sam
Would you like a job? :)

Anyway the way I see it is if you are going to use the whole 30k limit in one hit, it may be better to go a normal HL, then concentrate on paying it down as usual.

If the funds have multiple purposes over a longer period of time, a LOC offers more transactional flexibility. (kinda like a big credit card)

As Sam mentioned, it's a personal choice which your Broker will help after investigating your financial goals (alas, he won't get paid a cent for it due to CBA's commission structure!)

im kinda leaning towards extending my loan, seems the way to go, i bank with westpac but my home loan is through cba, opening another account for a LOC will just create another account to manage, and i wont be using it as a daily account/depositng my salary into it.