| Line
of Credit home loans
This type of property loan revolves around equity built
up in your property and allows access to funds when
needed. These products are creative ways to raise funds
for investment by providing cash up to a pre-arranged
limit. Each month the loan account balance is reduced
by the amount of cash coming in and increased by the
amount paid on the credit card or withdrawn in cash.
As long as there is consistently more cash coming in
than going out these accounts can work well. However,
they can be very costly if the balance of the line of
credit is not regularly reduced. It requires an interest-only
payment as a minimum each month, which can add up to
a lot of interest over the long term.
Pros:
Use
the money you need and pay it back when you can
Home loan interest rates tend to be lower than credit
cards or personal loans
Offers flexibility
Cons:
Possibly
reduces equity in your residential property
Usually higher interest rates
Need to be disciplined to make principal payments regularly
Can be very expensive if not used carefully
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