What can the Line of Credit option be used for?

It can be used to enter a Home Equity Loan or a loan facility that is often linked to a property. 


How to model a fixed equity release amount.

Start in Dashboard, select the '+' button in the bottom right corner and then select the Debts and Loan tile and select Line of Credit.

Any field with an asterisk needs to be completed.  In this example we are modelling a Fixed limit and this has been selected from the Credit Limit Type drop down.




Next, enter the monetary amount of the Credit limit.  Once the balance reaches the Credit Limit that is the maximum that can be borrowed.

Only enter a figure in the Balance field for existing facilities when some or all of the credit limit has already been drawn on.  For new equity releases, this field should be left blank.

Where the client is paying the interest of the equity release, then select Interest only from the Payment Type.  It is more common that the interest is rolled up and add annually to the debt.  Where this is the case choose Repayment and do not enter an amount in the Payment Amount field. 

Note: The Line of Credit Facility, by default does not allow ad hoc withdrawals.  It is therefore necessary to amend the Withdrawal Limit. Where the As Needed option is selected, the software will take funds in any given year as required up to the Credit Limit. 

A one off payment or a series of smaller payments can be made from the Line of Credit.  In this case the Withdrawal limit of Scheduled Only should be selected and a Planned Withdrawal set up. 



How to Set up a One-off or Regular Planned Withdrawal from the Line of Credit

To add a one off payment or a series of annual payments, select Planned Withdrawals > Add Withdrawal.


If you are happy with the information entered for the Line of Credit entry Press Save & Continue when prompted. Otherwise Press Cancel to finish entering the Line of Credit fields before adding the Planned Withdrawal as above.


For a one time payment enter the fixed amount and select No in the Recurring field.



There are also options for Fixed With Inflation, percentage of credit limit and All Available for example, choose the most appropriate.

Now select Timing to enter the year this payment should be made from the Line of Credit. Drag and drop the event into the Withdrawal Timing box. 


Now click on Save


The results can be viewed in Lets See>Cash flow




Please note that a Planned Withdrawal is assessed as Habitual Income, so where the Line of Credit Withdrawal will cause Surplus Income i.e. it shows above the black total need line, this income will be spent and disappear from the plan.  If you want the surplus to be saved instead, you would need to transfer the surplus funds to cash or a savings/investment. 

Further information on this can be found here.  Is Surplus Income spent or saved?


To set up a series of series of  annual payments enter the fixed amount and select Yes in the Recurring field.  You are prompted to update Timing



There is now a Withdrawals Ends option.  Drag and drop the event when you want the withdrawals from the Equity Release to end.  Note that withdrawals will only be made up to the Credit Limit. 


Again, the results can be viewed in Lets See>Cash flow.



How to model a equity release as a percentage of a property value.


In this example the Line of Credit must be linked to a Property.  To do this select Linked Properties>Link to an Existing Property and then select the property to link from the list and select Save. 






Next, enter the basic information. In this case you would choose Credit Limit Type, Percent of Equity and enter the percentage in Percentage of Available Equity in Linked Asset



As with modelling the Fixed amount, the Withdrawal limit and Planned Withdrawal limits should be edited. 

One off payments or a series a payments can also be modelled as outlined above.  


View in Year View

Once you have set up the line of credit and any Planned Withdrawals needed, view the details in the Let's See chart by selecting Year View top right. You can view the balance, and any interest rolling up if no repayments are made, in the Debts tab. Any money coming into the plan from the Line of Credit will be shown in the Cash Flow tab and any repayments being made to this credit are shown in the Expenses tab.


Further reading

Adding Events

Planned Withdrawals

Adding property

Line of Credit v Equity Release