Loan Features: What can your loan do?
There are many loan features (that we don’t run through), the below are important ones for investors to know about. These offer flexibility to investors over time.
- For some loans, you can keep the loan and swap the security over time. This allows you to sell your properties and swap to other properties, but keep the loan in place. It is useful when swapping homes. For property investors who cant obtain finance from their lender anymore due to a change in situation, this is useful as it allows you to change the allocation of your assets without having to ‘re-prove’ you can meet the eligibility for the loan.
Line of Credit Facility:
- A line of credit is a loan account that you can transact out of. This is used like a credit card, but is secured by a property. This offers maximum flexibility, as the purpose of funds is always clear and can be allocated to an individual transaction. While this is the most flexible and preferable to manage taxation consequences, it is usually more expensive than normal loan products. Furthermore, it also can be called in by lenders over time, which makes it more uncertain than standard term loans.
- Most lenders will allow you to split your loan into multiple loans. This is useful for property investors over time, who should seek to allocate their loans for a specific purpose. Once you have a portfolio, this becomes increasingly important.