Revolving credit structure

Treena asks:
(updated on Tuesday, February 25th 2014)

We have borrowed against our rental property to build our own home. We currently have a $300,000 Orbit loan and have drawn down nearly $200,000 of it. What is the best way for us to structure the loan? Should we do an interest only loan and then save as much as possible to pay off lump sums?

Our Experts Answer:

Definitely take personal tax advice here as there may be some personal issues which you need to take into consideration in regards to how you structure things. I would however normally recommend that if the revolving credit facility is just against the rental property that you look to completely draw down all funds against it as to minimise the lending against your personal property. If lending is required against the personal property then ideally you should look to have it with a different lender to remove the cross security against the two properties.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
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