A Mortgage for Life
Maybe a better expression would be “A Mortgage for Living“. One of the best kept secrets in Banking is the Revolving Line of Credit Mortgage (RLOC). Most Banks and many non-bank lenders have a RLOC product, but most people don’t know they exist, let alone understand the power they can give responsible borrowers. This type of Mortgage provides permanent access to funds up to an approved credit limit (80% of the value of the security property).
This type of Mortgage allows responsible borrowers to run their finances without the need to revisit or reapply to their Lender for extra funds for life. These loans can be run as a “one account” banking facility that receives all your income and accommodates all debts.
Used wisely, a RLOC can greatly reduce the amount of interest paid on debt because your income is credited directly to the loan and immediately reduces the principal until redrawn. In conjunction with a credit card, borrowers can accumulate regular living expenses on their credit card while all income is directed to the RLOC account reducing the debt until the due outstanding balance of the card is automatically cleared from the RLOC at the end of the interest free period. Because your credit limit is higher than your actual level of debt, you always have access to funds and have therefore, no need for other savings or cheque accounts.
The RLOC Mortgage is ideal for people with strong incomes who want to reduce their debt quickly and have the discipline to manage the credit limit. The facility can be split into sub accounts if required to separate personal debt from investment debt. This type of mortgage is ideal for investors who require permanent access to funds for investment purposes. Once the credit limit is established, it remains in place regardless of the amount of actual debt.
These are very powerful loans and are not for those who can’t manage their spending. On the other hand, for those who are good with their money, they provide an excellent vehicle to manage their finances in a single account and minimise banking fees and many unnecessary over the counter type transactions.
Talk to us about how a RLOC might assist you better manage your current finance needs and provide a secure flexible platform for everything else your financial life will demand.