Lines of credit


An offset loan is usually more appropriate because repayments are principal and interest. Lines of credit require more discipline to operate because repayments are interest only based on what you owe. This is a product that sits in a very small niche and should only be used by a seasoned investor who likes to have ready access to loan funds to make a quick investment. Used correctly they van be very convenient but they are very tricky to get right and in most cases are disastrous in that the borrower makes little to no progress paying it off. It acts like a big overdraft / credit limit with repayments based only on what is owing. You are issued a cheque book and atm card from which you withdraw from your line of credit in much the same way as you would a day to day bank account. You can also have your wages credited to the line of credit and direct debits can be set up to be drawn out.