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Line of Credit Loan
These loans are more suited to those in business like hospitality requiring a money in money out type of loan facility. Generally, these types of loans are slowly disappearing, as loans with redraw and offset accounts provide virtually the same functionality but at a lower interest rate.
What is a Line of Credit?
A Line of Credit (LOC) gives you access to the equity you have built up in your property, with interest accruing on the loan balance. Your lender will provide an approved limit, and then it is up to you how you use the funds – either in a lump sum or bit by bit. This gives you the flexibility for renovations, purchasing shares or a range of personal options.
The repayment depends on the amount of money you have withdrawn from the available balance. In most cases, only the interest needs to be paid back. Some LOC loans will also allow you to add the interest to your balance if that balance doesn’t exceed your approved limit.
What to look out for
There are, however, some things to be aware of:
The interest rate may be higher than other loan types
As you will usually have access to a large amount, you must be disciplined and financially organised.
The credit limit is usually dependent upon the property value, not your equity.
Still have questions? Ready to apply?
Understanding what you need in a loan and helping you navigate the many options is what we do best. Get in touch with us on 0418 340 485, or, if you prefer, you can email us using the form below. We are here to help!