Line of Credit

Key features

A line of credit (LOC) allows you to access additional funds by drawing on the equity value of your home. Setting up a LOC involves fixing a limit on how much you can borrow - generally it's a fixed percentage of your loan amount. You direct income from all sources into your line of credit loan account and then draw down funds as and when required.

Advantages

You'll have greater flexibility in managing the size and timing of your repayments, enabling access to additional funds and even taking your mortgage with you to a new house. Because your entire income stays in your account until you need it, a major portion of your income stays in your loan account longer, and saves you interest. LOCs are a great way to fund projects where you need access to your funds in stages over time- such as a home renovation.

Considerations

These products may seem like the best thing since sliced bread, but he warned- most come at a price, and the extra funds you shell out for a loan feature may not actually pay off financially. If you are not disciplined with your money, you are probably best off not drawing down on your home equity.

Suitable for

A line of credit is only a sensible choice if you are extremely disciplined in managing your everyday finances. If you will be tempted to use the funds for spur of the moment purchases, a line of credit is probably not for you.

Line of Credit

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	7.95%	N/A		7.90%	N/A
	7.24%	N/A		7.90%	N/A
	7.68%	N/A		7.91%	N/A
	6.99%	7.13%		8.01%	N/A

* Comparison rates are based on a loan amount of $300,000 over a 30 year term. Comparison rate schedules are available via each lender’s website or by contacting Compare-Homeloans. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates are effective as of 11-01-2011.

All information provided is a guide only and may not be complete for your purposes. Whilst displayed rates are regularly updated, neither Compare-Homeloans nor the Providers warrants the accuracy of any information and you should confirm it with the Provider before acting on it. Except for responsibilities implied by law which cannot be excluded, neither Compare-Homeloans nor the Provider is responsible for any loss, damage, cost or expense incurred by you as a result of any error, omission, or misrepresentation in relation to the data herein.