LINE OF CREDIT HOME LOAN

Line of credit or equity home loans allow you to borrow up to a specified limit, which is secured with a first mortgage on a residential property. These home loans provide access to funds, when required, up to the original limit set. 

Also known as a revolving line of credit, these types of home loans have become popular due to their flexibility and features. A line of credit home loan is a popular option as you are able to incorporate your savings, borrowings and investment requirements within the home loan with a line of credit attached.

Advantages of a line of credit home loan

• Most flexible type of home loan available

• You can draw down on the loan at any time up to a prearranged credit limit

• This type of home loan has no set term

• Line of credit home loans are ideal for investment purposes

• Added flexibility of a transaction account built into the home loan - it allows the borrower to access the account to meet day to day living expenses

• Use the money as you need to and pay it back when you can

• Since it is secured by residential property, the interest rate is less than the interest rates on a business loan, credit card or personal loan

• It is also a flexible way to raise funds for investment purposes by providing cash at call up to the prearranged credit limit  

Disadvantages of a line of credit home loan

• Requires discipline to ensure that over time, the principal/balance of the loan is reduced

• It is possible for undisciplined borrowers to reduce the equity they have built up in their home

• Interest rates can be higher than the other home loan types

A line of credit home loan can be used for any of the following situations:

• Purchase of shares

• Purchase an investment property using the line of credit home loan

• Renovate your existing home to add extra value

To find out more about a line of credit home loan or any of the other home loan and mortgage loans products we have available, speak to one of the mortgage brokers today on 1300 55 10 45. We will be able to recommend a home loan product that suits your needs and circumstances. Please also use the finance calculators to get an idea of your borrowing capacity.