A line of credit home loan is a credit facility secured by a residential property. It is quite similar to a credit card in that you can withdraw funds up to a set limit at any time and repayments can be made in full or on a monthly basis. This type of loan has a set limit, generally higher than most credit cards, and you can withdraw up to your limit without the need for pre-approval. The interest rate is usually higher than a standard home loan but lower than a credit card rate.
As long as the repayments are being made, a line of credit can be used to do property renovations, invest in shares or property, or it can be used to pay expenses.
Most line of credit facilities offer you a cheque book, account cards and internet and phone banking. When used diligently, with financial discipline and budgeting, a line of credit can offer debt consolidation and flexibility.
