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Loc Repayment


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Ok, this is a long way off for most people here (ha!) but by mistake my LOC was actually listed as being due for replayment in a few weeks. Thus I actually now for sure know at least for Scotia exactly what the repayment plan is.

 

First it is over 10 years max. Of course you can pay it off earlier.

 

Two it is at prime during repayment for scotia - this seems to come up from time to time

 

Third the LOC is shut down - it becomes a loan only with payments fixed yearly it seems. Looks like it is updated once a year actually with respect to the interest rate as well. In theory you can prior to the loan shutting down take out the rest as a loan (max out the LOC) and just park the money I guess to still give you some flexibility. I am sure you can of course apply for other credit products but interesting to me is the fact the LOC itself disappears.

 

Lastly payment with principle and interest would start based on this one year after you finish residency/fellowships etc. That gives you a year to get organized - which is actually important because you don't get immediately paid say as a family doctor - turn around time for payments from the government are about 3 months. Have to factor that in with your budget.

 

So there you have it.

 

Just to expand on it for about a 200K loan if my math is correct here the repayment per month amount at 10 years is 2K a month at our current interest rate. Kind of nice symmetry I suppose there.

 

 

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some of it is in the fine print few read. Some of it also is not actually specified - they just leave things open so they can control it in the future. The prime rate for instance is not guaranteed. I don't think the repayment time period was either.

 

it is competition that real hones things rather than the contract in many ways.

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Interesting, I was told by Scotia when I signed up that the LOC would remain open for the rest of your life and that it would just convert to some other named LOC. If anyone can corroborate this, let me know, as I have being using other funds with the assumption that I could draw upon my LOC when starting up as a family doc.

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Interesting, I was told by Scotia when I signed up that the LOC would remain open for the rest of your life and that it would just convert to some other named LOC. If anyone can corroborate this, let me know, as I have being using other funds with the assumption that I could draw upon my LOC when starting up as a family doc.

 

that is what I was told previously or something to that effect - and perhaps if you push for it you can get that(?)

 

All I have right now is the black and white document right in front of me - the fine print as it were. It clearly states that is not the case by at least default, ha it actually really drives that point home actually - . Of course this would be after the 12 month grace period - perhaps you could have your clinic set up by then.

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I was told similarly by my advisor at RBC - that it could be converted into a different type of line of credit.  Frankly, I'm not counting on it - I don't know if you can count on much with the banks, unless they put it in writing.  But it would be nice to have some extra flexibility in early practice.

 

I have another meeting with them this week to sort out my finances pre-residency, so I'll try to remember to ask and report back.

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I was told similarly by my advisor at RBC - that it could be converted into a different type of line of credit.  Frankly, I'm not counting on it - I don't know if you can count on much with the banks, unless they put it in writing.  But it would be nice to have some extra flexibility in early practice.

 

I have another meeting with them this week to sort out my finances pre-residency, so I'll try to remember to ask and report back.

 

Please do! I found it interesting that this would be the time they should be in theory most eager to get my business - the LOC is a lure as it were to get you into a long term relationship with the bank. Now at supposed repayment I am exactly the point where I am a full doctor, perhaps getting a practice, one year out and looking probably for housing, long term investing, insurance....... bit of a marketing fail if they don't start selling and "closing the deal" at this point :)

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Hm.  My banker took a new job apparently and they automatically rescheduled me with someone who isn't a medical/dental person.

 

I guess I'll go anyway and just switch to a new banker altogether when I move to Toronto.  But I might not get your answer tomorrow.

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Ok - so I just spoke to my banker, and he conferenced in the medical/dental people, and I asked them too, so I trust that this is accurate for RBC:

 

When you finish residency, you can either convert to a 15 year term repayment or you can convert to a professional line of credit at prime (it stays open).

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Ok - so I just spoke to my banker, and he conferenced in the medical/dental people, and I asked them too, so I trust that this is accurate for RBC:

 

When you finish residency, you can either convert to a 15 year term repayment or you can convert to a professional line of credit at prime (it stays open).

 

ok so weird they don't mention that in the repayment letter, and next thought - why would anyone in their right mind chose the first option then? You could pay it off either way with the same payments but you would lose flexibility with the fixed payment option.

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Aren't you with Scotia though?  Maybe RBC's repayment letter is different. I (luckily) haven't seen it yet :P

 

ah yes, sorry missed that. Ok time now to check to see if there is a difference. If so we may have at last a important difference between the two.

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ah yes, sorry missed that. Ok time now to check to see if there is a difference. If so we may have at last a important difference between the two.

 

I'm guessing that even if it was a bit different all you'd have to do was mention the advantage of RBC and they'd sort it out... 

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Let us know. Although even if Scotia says no, would there be any point in switching until near the end of residency (for those of us still in medical school). Because right now I like Scotia.

 

I am just not sure how RBC is doing that with the loan - that is a huge unsecured LOC that no one would actually need at that point (ok, yes doctors make a lot but who needs a line of credit worth MORE than your after tax income for well over a year even for your typical surgeon or internal med doc - that is vaguely insane)

 

I want to see what Scotia has of course - good to compare things. Really the only important thing is if there was some flexibility in the repayment - big difference between no LOC access and say 2K a month every one repayment required and a 250K LOC access with flex payments.

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I guess the idea is that you have it to lean on while you're setting up your practice, and you have more flexibility with repaying?  Personally I'll pay it down as fast as I can anyway but I'll feel way better having that extra flexibility.

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I guess the idea is that you have it to lean on while you're setting up your practice, and you have more flexibility with repaying?  Personally I'll pay it down as fast as I can anyway but I'll feel way better having that extra flexibility.

 

but this is a personal LOC not a business one. I mean you would have a separate loan for your practise as the interest is a business expense. You would never want to use the LOC for both business and personal use.

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I don't really know enough about money, in that case.  Although when you put it like that, it makes sense.

 

no worries - I resist anyone saying I know a lot about this sort of stuff as I am not an accountant, merely an educated amateur with a degree in economics and interest in personal finance. Still I ran my own business so I will say it is pretty important not mix up personal and professional loans, interest payments or assets. Drawing form the same loan source for both personal and professional needs screams at me as a major no no :)

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  • 1 month later...

rmorelan, does the residency repayment period occur 12 months after med school or 12 months after residency is finished?

 

sent you a PM - it is actually 12 months after the end of your training. I say that because it can go past the end of your residency if you do fellowships.

 

Basically once you are ready to be  staff doc somewhere you have 12 months prior to repayment begins.

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