Line of credit loans
Line of credit loans are interest only variable rate home loans secured against
residential property, providing flexibility and a range of features. The main advantage
of a line of cedit product is being able to access funds as you need them for day
to day living expenses – similar to a credit card – with repayments being made in
full or on a monthly basis according to your needs and abilities. Line of credit
loans can also be used to purchase a home or investment property.
Advantages of Line of credit loans
- Borrowers are able to use money as needed and pay it back when they’re able to
- Feature a built in transaction account
- Greater flexibility in managing the time and amount of your repayments
- Credit limits are usually higher than for credit cards or personal loans
- Interest rates are usually lower than for credit cards or personal loans
- Good way to fund those extra expense projects, such as home renovation
- Consolidate debts by transferring other debts into your mortgage
Considerations – Line of credit loans
- Incur higher interest rates
- Failure to make payments plus interest could result in the loss of your home
- Limitations; some plans may require you to borrow a minimum amount each time you
draw on the line and to keep a minimum amount outstanding
- Incur additional fees, taxes and up front charges
Line of credit loans are suitable for
Line of credit loans are suitable to borrowers who are extremely disciplined with
their finances, due to the high risk of losing your home if repayments are not diligently
met.
Examples of Line of credit loans
- Ratebusters won the non-bank category for Best Australian Line of Credit
Home Loan in the 2007 Your Mortgage ‘Mortgage of the Year’ Awards, with
their ‘Rate Buster Line of Credit’ product.
- Macquarie Mortgages won the bank category for Best Australian Line of Credit
Home Loan in the 2007 Your Mortgage ‘Mortgage of the Year’ Awards, with
their ‘SELECT Line of Credit and Combo’ product.