We are experiencing many warnings of housing bubbles, crazy house prices and other alarms. So what needs to happen in the economy to cause dwelling prices to fall significantly is a question we ask Michael Yardney. He outlines the 10 events that will signal such an event.

Our finance expert Andrew Mirams explains the difference between a Line of Credit, Offset Account and Redraw facility. He outlines when it is best suited and which one might work best for you.

You will have heard agents talk about getting a premium price for a property – it is language they use to secure a listing. In a new book that I have been reading, written by top Aussie agent Peter Hutton, he tells you how to make sure you get the LOVE price when you sell. We talk to Peter today.

If you are a first time investor well we will have the golden rules for you to follow if you don’t want your plans to come to a screaming halt.

It is romance sometimes that drives investors to think that renovations are the path to wealth. Something you can build in to add value. Well we tell you today that renovation could be the last thing you want to do.

 
Transcripts:
Andrew Mirams
Kevin:  We hear these terms all the time, and I don’t know about you but sometimes it’s nice to know exactly what they mean: lines of credit, offset, and redraw facilities. These are all important tools for property investors but what do they really mean and how can you best use them?

Andrew Mirams from Intuitive Finance joins me. Good day, Andrew.

Andrew:  Good day, Kevin. How are you?

Kevin:  Good, mate. We bandy these terms around all the time. I thought it might be helpful if you could take us through what they really mean.

Andrew:  Yes, we do. It’s quite interesting. We ask all of our clients when we’re talking to them about these terms, and it’s quite interesting the amount of information or lack of information out there about what they mean and how it can have an impact on certainly your investment portfolio.

For the home, it’s a little bit different, but if you’re using some of these facilities on an investment portfolio, you can actually muddy the waters, really mix up your debts, and it can have some significant tax impacts.

Kevin:  Would it be fair to say, Andrew, that these can be used at different times for where you are in your portfolio building status?

Andrew:  Absolutely. Lines of credit, they were the first thing that came to fame with all these, “You can pay your home loan off in 10 years and draw your money in,” and things like that. What we’ve found for people, as a rule, as a home, we think it’s normally better to have a home loan with an offset account.

Lines of credit, people tend to not be that disciplined with their home, and they can see themselves getting ahead, and then they find their way to going on that holiday, buying a new car or something, and the debts tend to sit there and not reduce. Lines of credit are really effective for setting up your investment portfolio, trading, and helping you manage your day-to-day cash flow with an investment portfolio. That’s their real strength.

Kevin:  Pardon me interrupting you, but if I had a line of credit, say for $100,000 as an example, when the bank is looking at me as a financial risk, if you have $100,000 there even though you’ve only used $20,000 of it, do they say, “We’re going to count that full $100,000”?

Andrew:  Absolutely, they do. Yes, because you can go out and spend that tomorrow. It’s a bit like a credit card. It’s a limit. A line of credit is an exposure that you have. Yes, a lot of people we also talk to say, “I have a line of credit for $200,000 but I’m not using it.” It doesn’t matter because you literally write out a check tomorrow. That is why the bank is committed to give you that access to that credit, so yes, they always do an assessment based on you using the full figure. That is right, Kevin.

Kevin:  Let’s look at so