Line of credit
Line of Credit Loans are generally interest only revolving credit
facilities secured against the equity in your home or investment
property. These loans are also known as Equity Loans.
The borrower is required to make interest only repayments and has the freedom to choose when they will repay the principal. Lines of credit may be good for people who have fluctuating incomes as well as a great degree of discipline.
Similar to a credit card, a line of credit allows the holder to withdraw funds up to a set limit at any time and generally for any purpose. Unlike a personal loan, you do not need to justify the use of this facility to anyone other than yourself. If you think that you may be tempted to use the line of credit as you would ready cash, for lifestyle purposes – then the facility is not for you.
So how does a line of credit work? The lender assigns you a credit limit secured against your property, and when you need cash you draw against that limit, usually by writing a cheque or using a special debit card. As you pay back the loan (the terms of repayment vary), the money becomes available to you again. Line of Credit loans usually attract a slightly higher rate of interest than a regular home loan.
One of the biggest advantages of a Line of Credit is that you always have ready access to money, which makes this type of loan attractive to investors. You can also use the facility to fund investments, home renovation and other unforeseen expenses. It is a great access to funds during short periods of unemployment, illness, maternity leave etc.
Do not be caught without access to funds again!
Why not use the available equity in your home to obtain funds for any worthwhile purpose?
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