Line of Credit loans are interest only variable rate loans that use the equity in your home and let you access funds when you need them through a transaction account.
A Line of Credit can be compared to a large credit card or overdraft at home loan rates that is secured by residential property. With this type of facility funds can be drawn up to a pre-approved limit either in their entirety or as required. Any funds paid into the loan can be drawn out again up to the limit.
This type of loan is commonly used by investors for flexible access to unutilised equity in their existing home in order to provide funds for further investment in the property or share market. Interest rates are variable and due to the level of flexibility are often higher than the standard variable rate.
Some lines of credit will allow you to capitalise the interest until you reach your credit limit i.e. use your line of credit to pay off the interest on your line of credit.
A Line of Credit loan can be an excellent tool for wealth creation.
