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Line of Credit x Standard Variable Rate with Offset Loan: understand the differences

What are the main differences between a Line of Credit and a Standard Variable Rate with Offset Loan?

The main difference between the two is functionality. A line of credit usually allows you to make minimum repayments equal to the interest-only amount – although sometimes for the first 10 years of the loan only. The maximum credit a line of credit will allow is given as a percentage of the value of the property, usually 75–80%. The major distinction from an Standard Variable Rate with Offset loan is that a line of credit has a maximum credit limit. You should be able to continually draw back or down to this credit limit for the life of the loan or the first 10 years.

A Standard Variable Rate with Offset Loan is basically a loan combined with a daily transaction account. A 100% offset facility has a separate daily transaction account. A Standard Variable Rate with Offset Loan and 100% offset accounts work on the same principle – the additional repayments made above the minimum repayments are used to reduce the balance of the loan on which interest is calculated. You can deposit any income into the account, use either facility as a daily transaction account, and not be penalised by minimum withdrawal amounts or excessive withdrawal fees (apart from the standard ATM charges). The only funds available/accessible for withdrawal or redraw from an Standard Variable Rate with Offset Loan are the additional payments.

A line of credit can operate as a Standard Variable Rate with Offset loan. It may have a minimum redraw amount ($50–2,000) and may have a redraw or withdrawal fee (typical maximum of $50).

Assuming the rates and ongoing costs are the same, you are permitted to make more than interest-only repayments on a line of credit, and there is no minimum redraw amount or redraw fee, then the overall interest reduction should be the same. However, lines of credit often have higher rates or ongoing fees.

At Peasy we will be able to guide you through the benefits and the drawbacks of each option – so get in touch today to find out what best suits you.

DIRECTOR & OPERATIONAL MANAGER

Amanda

Amanda is the Director and Operations Manager at Peasy, and one of the steady hands behind the business’s people, processes and customer experience. She helps connect the moving parts, from supporting the team to improving internal systems, so Peasy can deliver the kind of service clients remember for the right reasons. 

Amanda is the Director and Operations Manager at Peasy, and one of the steady hands behind the business’s people, processes and customer experience. She helps connect the moving parts, from supporting the team to improving internal systems, so Peasy can deliver the kind of service clients remember for the right reasons. 

Amanda is the Director and Operations Manager at Peasy, and one of the steady hands behind the business’s people, processes and customer experience. She helps connect the moving parts, from supporting the team to improving internal systems, so Peasy can deliver the kind of service clients remember for the right reasons. 

Amanda is the Director and Operations Manager at Peasy, and one of the steady hands behind the business’s people, processes and customer experience. She helps connect the moving parts, from supporting the team to improving internal systems, so Peasy can deliver the kind of service clients remember for the right reasons.

With a background across home loans, hospitality, tourism and events, Amanda brings a people-first mindset and a natural ability to stay calm when things get busy. She is passionate about creating an environment where the team feels supported, customers feel cared for and the business continues to grow with purpose.

Out of the office, Amanda loves spending time with family and values wellbeing, travel, culture and time to recharge. She enjoys staying active, reading, unwinding with a favourite show and sharing good food, good wine and plenty of laughter with the people closest to her.

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