- Access equity in your property
- Make additional payments
- Quick access to funds when you need
- Flexible repayments management
- Be wise on how equity used
- Ideal for further investments
Line of credit or equity loans
These are designed to allow you to access the equity available in your property. The amount of equity generally able to be accessed is 80% of the property value less the current amount of the loan.
The amount of equity available for your future use increases by making additional repayments, and as your property value increases, so does the amount of equity available because your loan size remains the same.
Once you have your loan limit established, you can make additional payments into your loan, or lump sums, or draw against the increased equity by virtue of value growth, without the need to establish another loan.
If you are disciplined with your finances, this is a great way to finance home improvements, travel, purchase of another investment etc in preference to taking out a more expensive personal loan.
Benefits:
- Allows you to access finance when you need it at home loan interest rates rather than more expensive credit card or personal loan rates
- Allows flexible payments, minimising repayments during periods you require cashflow for other purposes
- Very flexible with quick access to additional funds when you need them without a new loan needing to be taken out
- Usually only requires a minimal admin fee to access the equity funds
Disadvantages:
- Every time you draw on the equity it will decrease the equity you have in your property
- Usually involves higher interest rates than basic loans
- Using equity means paying more interest, therefore increasing the total interest you pay
- Can be very expensive over the long term if not used wisely
With hundreds of different loan products in the market from all lenders, your professional Time Finance Mortgage Broker will help get the right loan for you!The benefits of why you should use a professional Time Finance Mortgage Broker are guaranteed.
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.