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Line Of Credit

Flexible revolving credit facility, similar to a credit card. Generally with a lower interest rate.

While there may be benefits to having a Line of Credit [e.g. you have flexibility in how and when you drawdown, with unlimited drawdowns], there are also other factors that need to be considered.


  • Funds are readily available for any personal purpose or investment.
  • Flexibility in use of funds: ATM, online bank transfers, branch.
  • No requirement to make principal repayments.
  • Additional repayments can be made at any time, including having salary paid to the account.
  • While interest rate may be higher than a standard home loan, the interest rate is generally lower than Personal Loans or Credit Cards.
  • The Interest Rate is a variable rate which is subject to market fluctuations.
  • The Interest Rate may be higher than other variable rate loans.
  • Interest is usually higher than a standard variable rate loan.
  • Ease of spending, without discipline, may see the debt increase up to its limit and remain as hard-core debt.
  • No requirement to make principal repayments may mean you never pay the loan off.
  • Higher cost overall if there are no reductions to the principle.
  • Tax advice should be sought if using a Line of Credit for investment as any subsequent credit to the Line of Credit is generally accounted against oldest debt first.
  • Most lenders will only consider where the client can demonstrate good financial discipline, a good credit history and stable income.
  • Generally you would be required to at least cover the amount of interest and charges each month.
  • The funder can ‘call in’ the facility with full repayment required with short notice.