Equity is an important asset, both as an indicator of net worth and as a tool for building personal wealth. CUA's equity line of credit could help you make the most of your investment opportunities.
As soon as you start paying off your home, you start building equity in your home loan. This means that you can start owning a part of your purchase. Each additional repayment increases the stake – or equity. This stake represents the kind of personal wealth against which CUA grants their Equity Line of Credit.
Changes to investment lending
From 31 March 2017, CUA paused all new lending to investors until further notice. As a result CUA does not currently accept applications for investor loans.
An equity line of credit is a lump sum from which you can withdraw whenever and however you wish. This kind of credit option could be ideal for expanding property and other investment portfolios. It is especially lucrative if your property value increases, as this means increased equity and access to a bigger line of credit.
|Product Name||CUA Equity Line of Credit Home Loan|
|Interest Rate Type||Variable|
|Comp Rate^ (p.a.)|
|Minimum Loan Amount||$10,000|
|Maximum Loan Amount||$3,000,000|
|Maximum Insured LVR||80%|
|Mortgage Offset Account||Yes|
|Mortgage 100% Offset||No|
|Loan Redraw Facility||Yes|
|Split Loan Facility||Yes|
|Fixed Interest Option||No|
|Suitable for Investment||Yes|
|Available as equity loan/line of credit||Yes|
|Repayment Type||Principal & Interest and Interest Only Options|
|Ongoing Fees||$0 p.a.|
- $0 Ongoing fee.
- Extra repayments are available.
- Suitable for investment.
- You can borrow up to 95% of the property value.
- $600 Application fee.
- A $200 discharge fee when closing the loan.
- No redraw facility.
- No offset account.
Things to consider about the Equity Line of Credit
CUA's Equity Line of Credit allows borrowers up to 80% of the property's value with repayments at a interest rate. The Equity Line of Credit is like a credit card, but with a much higher withdrawal limit. Borrowers only pay interest on the amount withdrawn from the line of credit.
Always keep in mind that a line of credit home loan shouldn't be used as a credit card, but extremely carefully, as the funds you are borrowing are based on your equity. Before applying for a line of credit home loan have a think about what you'd be spending the funds on, and if need be seek the advice of a financial planner for more information.
Features of the CUA Equity Line of Credit
- No monthly or payout fees. Borrowers pay no monthly administration fees for the Equity Line of Credit. No early payout fees are levied if borrowers choose to repay the credit in full.
- Home loan rates for purchases. Since the Equity Line of Credit is granted against shares in property, amounts withdrawn for purchases are repaid with home loan interest rates, rather than interest rates offered with personal loans or credit cards.
- Lump-sum payments. The Equity Line of Credit allows for lump-sum repayments without penalty.
- Wealth creation. The more equity held in the property and the higher the property value, the bigger the line of credit to expand an investment portfolio with additional properties and company shares.
- 80% of property value. CUA allows a line of credit to be set up for 80% of the property's value. The higher the property value, the higher the amount forwarded for the line of credit.
- Further advances. Borrowers can apply for further advances on the Equity Line of Credit.
- Financial flexibility. Borrowers have a certain flexibility in repaying what they withdraw. However, this kind of unlimited access to funds requires discipline and strict financial planning since the home is used as collateral.
- Establishment fee: $600. All clients applying for home-loan credit and lines of credit are charged this fee for the administration and preparation of the loan and the relevant documentation.
- Third-party costs. All charges incurred for solicitor services, the government's stamp fee and government registration are charged to the borrower's account.
- Security administration fee: $195. This upfront fee covers the cost of setting up your property as security for the loan.
How to apply for the CUA Equity Line of Credit
Applying the CUA Equity Line of Credit involves much of the same documentation needed for a home-loan application.
Applicants must be Australian citizens or permanent residents, over the age of 18 and able to produce proof of a regular income. Along with identification documents and proof of income, line of credit applications also require:
- The details of what is owed on the current home loan to show equity
- The value of additional assets like investments, savings and properties
An equity line of credit is more than just an endless supply of funds: by using property value and equity as assets, it's an opportunity to invest in personal wealth.