Line of Credit or Equity Loan

Often lines of credit do not require you to make regular payments so long as you remain within the credit limit - this is called capitalised interest.  Instead, when interest is charged to your account it is added to the balance of your home loan. Thus for instance using the example above, if you need to pay $1,500 for interest on the $250,000 instead of being required to pay that amount into the loan, it simply becomes a loan of $251,500 which you pay back when you like. But of course if your credit limit is $300,000 and you're already borrowed to that limit, the lender is going to want to see some payments into your account to service the interest.

As you can see, a line of credit is one of the most convenient forms of credit.  Its also more risky for people who don't keep a watch on their finances. If you have a line of credit, always keep track of how much you owe.

Note also that lines of credit are regarded by most lenders as premium products. They usually charge a higher interest rate on lines of credit.  With a few exceptions this is even true within 'professional packages'.    Contact us to find out which lenders will offer professional package type discounts on lines of credit.  And if its hard for you to qualify for a professional package line of credit, we've set out some ways in which you can use cheaper products to give you the same results as a more expensive line of credit.