Advantages of line of credit loans

Before we consider the advantages we need to know what a line of credit loan is. It is a loan that you can take as a house owner from the equity available to you. The equity is the difference between the home loan value and the market value and mortgage. A home equity line of credit loan is like an open ended loan account.

It is a flexible loan option where you can withdraw money as and when you need and return money as and when you have some. Naturally all the money that you withdraw is going to incur some rate of interest. However, usually this rate of interest is lower than the rate of interest of your house loan, making the loan more affordable and easier to repay.

One major advantage of such loans is that the home owner can make use of the value of his house. The house does not need to be sold and so his initial investment is safe, and he gets to use funds that would otherwise be locked away. Besides being a loan it also is tax deductible, so getting this loan will help you claim a refund on your taxes. This is another sound reason to invest in such a loan as opposed to any other.

One more use for a line of credit loan could be to invest in a second property and build wealth, without having to physically sell the first one. So there are many advantages to getting a home equity line of credit loan.

Find out how you can save on your home loan Australia using a home loan calculator.