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A Line of credit is a home loan that is more like a credit facility. With this type of home loan you have a credit limit, and if you owe nothing, you pay nothing that month. If you owe $10,000, your repayment that month will be the interest charge on $10,000.
Lets look at a couple of example to see how a line of credit works. Lets assume the credit limit is $100,000. If you owe $10,000 your will pay monthly repayments will be interest charges on $10,000 and you will have $90,000 of available credit. If you have spent some more money, on a car for example, and now owe $40,000 on your line of credit, your monthly repayment will be the interest charge on $40,000, and have $60,000 available credit. A really handy facility.
A real advantage to a line of credit is that you can have a balance of $0, and the limit remains for the life of the home loan. Alot of investors, share traders like this facility, as its handy to have that available credit should they want to invest. A line of credit is a great tool for people who like to have a cheap credit facility available should they choose to use it.
A line of credit generally has a variable interest, although a few banks or lenders offer a fixed rate line of credit. The interest rate on a line of credit is generally a little higher than a standard variable rate home loan, but generally only 0.2% to 0.5% higher.
If you would like some more information on line of credit home loans, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.