Line of credit home loans

Line of Credit Home Loans

A line of credit home loan lets you borrow against the equity in your property up to an approved limit and draw funds as you need them. You only pay interest on the amount you use.

It's flexible, but without a set repayment plan the balance can stay high for years.

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How does a line of credit work?

Your lender approves a limit based on the equity in your property. You can draw money up to that limit, repay it and draw it again, much like a very large credit card secured by your home. Interest is charged only on what you've used. You can have your income paid into the account to reduce the balance.

Benefits

Flexibility: borrow as much or as little as you need, up to your limit.
Convenience: deposit and withdraw like a normal account.
Interest only on what you use: unused funds don't cost interest.
A buffer: funds are there for unexpected costs.

Risks to weigh up

It's easy to keep the balance high for years if you only pay interest
Rates are often higher than standard variable loans
Your home is the security, so missed repayments put it at risk
Many lenders have reduced or withdrawn these products

We'll show you whether a line of credit, a redraw facility or an offset account is the better fit. See also renovation loans, variable home loans with offset and using your property equity.

Frequently asked questions

How is interest charged on a line of credit?

Interest is charged only on the amount you've drawn, not the full limit. Many lines of credit are interest only, so the balance doesn't reduce unless you pay extra.

What's the difference between a line of credit and redraw?

Redraw lets you take back extra repayments you've made on a standard loan. A line of credit is a separate revolving limit you can draw on and repay at any time, usually with a higher rate.

Are lines of credit still available?

Fewer lenders offer them than in the past and those that do apply stricter limits. We can check which lenders on our panel still offer them and whether an offset or redraw would do the same job more cheaply.

Want access to your equity?

We'll compare a line of credit with offset and redraw options so you can choose the right fit.

Get in touch

Or call us on (07) 3194 0888