Loan Types
Line of credit
A line of credit is more like a personal loan secured against your property. There are two basic types – revolving and reducing lines of credit.
A revolving line of credit allows you to draw down to the prearranged credit limit as you require (usually about 80% of the value of your property). Think of it as having a credit card limit that you can keep drawing on. This can be great for property investors who can use the one loan to buy and sell property without having to keep re-applying for home loans. These are typified by:
- Use the money you need and pay it back when you can
- Unlike a standard interest only loan that reverts to Principle and Interest usually after 5 years this loan remains Interest Only
- Interest rates tend to be lower than credit cards or personal loans however slightly higher than standard loans
- Possibly reduces equity in your residential property