A line of credit loan provides you with access to the equity in your home or investment property up to a pre-approved limit. You can access funds as you need to and use them for things like renovations, investments or other personal purchases. The interest rate on a line of credit is usually a variable rate and repayments are interest only.
Advantages:
- You can use the money when you need it and pay it back when you can
- You only pay interest on what you use
- Provides you with a financial buffer
- The interest rates are generally lower than a credit card or personal loan
Disadvantages:
- You have to be disciplined. You need to make sure you pay off the principle as well as the interest so that your loan reduces over time
Download our ‘Which Home Loan’ brochure (pdf) for more tips and general information.
