A line of credit is an interest only variable rate loan secured against a residential property allowing access to funds whenever you need them. Such loans have the added flexibility of a transaction account built into the home loan. Line of credit products are a flexible way to raise funds for investment purposes by providing cash at call up to the prearranged credit limit.

You to use the money as you need it and pay it back when you can. In that way it is comparable to an overdraft but at a much better rate of interest. A Line of credit also allows the borrower to access the account to meet day to day living expenses.

Generally these types of loans allow interest only repayments, however there are variations and some lenders may require principal and interest repayments to ensure principal reduction is being made.

The interest rates available on lines of credit are similar to other home loan products and are much lower than the rates on credit cards or personal loans. Credit limits can also be higher than these alternatives, but will depend on your equity in the property.

The main risk attached with Lines of credit is that irresponsible borrowers may erode all the equity in their home. However for most home owners a line of credit is the most cost effective loan available and are hence the most sensible choice.