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About Line of Credit Home Loans

A line of credit home loan allows you to borrow money up to a specified limit, repay that amount and then borrow up to the limit again numerous times.

Such a mortgage operates similar to a credit card – you draw down as much as you need and then pay it back.

There are two options to choose from:

Principal and Interest Line of Credit

A P&I loan has a reducing balance, meaning every dollar goes towards paying down your home loan sooner, saving you years of payments on your loan and thousands of dollars in interest.

The benefit of this option is that you avoid the common trap with a Line of Credit where you don’t pay down the principal and find yourself still owing the full loan amount 10 years into the home loan.

Interest Only Line of Credit

where the home loan credit limit remains constant for the 10 year interest only period on this fully transactional line of credit.

The benefit of this option is that you can use the equity in your home for an investment property, shares or other personal uses.

Compare our split home loan interest rates and product features below.

Advantages

  • You only pay interest on the amount of money you actually borrow, not on the full available balance

  • Once the line of credit has been established, you are able to access the funds when required without delay

  • Once the borrowed amount has been repaid, you have access to the full line of credit amount again

  • A line of credit comes in handy during times of sporadic cash flow or for short term finance needs

Disadvantages

  • Interest-only repayments on a line of credit can result in your still owing the full amount, as principal remains unpaid

  • A secured line of credit means that your home acts as collateral and - if unpaid - the full amount is added to your mortgage