What’s the difference between a line of credit and a standard home loan?
A line of credit is similar to an overdraft facility in that you have access to a pre-approved credit limit (e.g. $150,000), which you can access at anytime through a transaction account. You can use as much or as little as you like and only pay interest on what you’ve used. There is no regular repayment schedule and no principal repayments are required unless the credit limit is reached or cancelled. With a standard home loan, interest is charged on the principal (the amount you still have owing) and a regular repayment schedule is required.
