Line of Credit Home Loan
From an equity loan to a credit loan, a line of credit home loan is known by many names. But while the names might be diverse, the product itself is the same: It’s a home loan product that acts as your personal cheque book for whatever financial purpose you might have in mind.
If you’ve built up a healthy amount of equity on your home loan and are hoping to access it, a line of credit home loan from Future Financial gives you the flexibility to make use of this hard-earned money. It’s the home loan product for those with big goals and high prospects.
What is equity?
A line of credit home loan makes use of the equity you’ve built up on your property in the years since you’ve purchased it. For this reason, it’s important to define equity for those who may not be as versed in the language of real estate.
Equity is essentially the difference between the value of a home and the amount still owed on the mortgage. Over time, as capital gains appreciate on a property, this difference tends to widen, granting the homeowner more equity.
For example, assume that you own a property worth $500,000 and have been diligently making your repayments. You now have only $200,000 left to pay off the mortgage. This would give you $300,000 worth of equity which you could theoretically put toward some other financial purpose.
However, while typically to make use of this equity you would need to sell the property, receiving the equity in the form of the profit you make for the sale, a line of credit home loan lets you access this sum without needing to put your property on the chopping block.
How does a line of credit home loan work?
Much like a credit card or a cheque book, a line of credit home loan allows you to access an approved limit of borrowing funds whenever you need. You can access this limit all at once or piece by piece, depending on your needs, and do so using anything from an EFTPOS card to a cheque.
With a line of credit home loan, the credit limit depends on the value of your home. Depending on the type of loan you take out, this can be anything from 80 to 95 per cent of a property’s value, potentially giving you a significant amount of financing.
You can also choose to have your salary or wages deposited directly into the loan, allowing you to save on interest. And once you repay the line of credit, you can access it all over again, providing a limitless source of credit for those who are careful with their finances.
What can a line of credit home loan help me do?
A line of credit home loan can provide you with easy and affordable funding for a variety of financial goals, whether short or long-term.
For example, a line of credit home loan can serve as the ideal solution if you need a quick source of credit for a sudden, unexpected cost – a medical emergency, for example, or perhaps a car repair. In cases such as this, a line of credit home loan can very well mean the difference between success and strife.
In addition to this, a line of credit home loan can also provide you with the funding for a large but necessary expense. Whether you need to purchase a car, an important piece of furniture or a vital appliance, this product can make it happen.
Perhaps the most attractive thing about a line of credit home loan is that it is a relatively safe way of accessing credit that avoids the need to seek out the financial aid of unscrupulous lenders. While credit cards and personal loans can have extremely high interest rates, home loan rates tend to be significantly lower. This means you can borrow without the anxiety of worrying if you will get caught in a trap of debt.
Don’t forget, too, that line of credit home loans are based on your home equity. They’re therefore based on true value that has accrued on something you own, helping to give you assurance and peace of mind when drawing down the money.
Line of credit home loans aren’t simply for short-term payments, however. They can also be put toward more long-term financial goals.
The credit you receive from this product can be integrated into your investment strategy and invested in the share market. If you make the right investment choices, you can use the returns you make on any shares and put them back into your line of credit home loan, increasing your equity. And with your loan paid off, you’re free to draw down more funds if you wish to invest further.
Not only that, but you can make use of this line of credit for any other type of property-related expense. Perhaps you need to fund an important maintenance or repair project to keep your home safe and looking up-to-date. Or maybe you want to make some major renovations to increase the home’s value, such as adding a pergola or terrace. You might even be looking to invest in property, and you want to use the equity you’ve diligently built up as a responsible home owner in order to fund a new purchase.
This is not to mention the myriad personal uses a line of credit of home loan can be applied to. With the money you draw down from this product, for instance, you could fund the holiday of a lifetime.
Whatever the goal, a line of credit home loan can be the key to achieving it.
The case of Melissa and Adam from Ellenbrook
Melissa and Adam are a middle-aged couple with two teenaged children living in the sprawling Western Australian capital of Perth. Around 15 years ago, they purchased a house in the quiet suburb of Ellenbrook for what was then a bargain – just over $150,000. They made the right renovations on the property, and over the 15 years they lived there, their house has soared in value, giving them hundreds of thousands of dollars worth of equity.
Recently, Melissa and Adam’s car broke down and they need a new vehicle, particularly for Adam whose job involves a lot of driving. They don’t want to buy a used car that will fall apart soon after it’s purchased, but rather a quality machine that will last for a while. Unfortunately, the cheapest they can find is around the $20,000 mark. They want to take out a loan to purchase it, but that would mean paying interest rates of well over 10 per cent, miring them in further debt – and it’s challenging enough to juggle multiple other payments.
Instead, Melissa and Adam decided to take out a line of credit home loan. They already have a wealth of equity built up, after all, so why not use it? By taking out a line of credit home loan, they were able to purchase a new, reliable vehicle while paying a relatively low interest rate on the loan.
Take out a line of credit home loan at Future Financial today
With a Future Financial line of credit home loan, you get the option of a cheque book, along with free redraw through online and phone banking. You’re also able to take out the home loan through a Visa card for added convenience, with a $20,000 limit and with the same interest rate tied to your home loan.
You will receive a monthly statement for both the line of credit home loan and the Visa account, and you can even set up a monthly payment to be paid from your loan for the closing balance of the Visa. This way, you can minimise your interest charges, protecting your finances from further debt.
Get in contact with Future Financial today if you’re ready to receive a line of credit.
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A Home Buyers Guide
Your Mortgage Your Options:
A Home Owners Guide To Refinancing
From the moment you turn the key in the lock and take those first few steps through your new front door, the feeling of owning your own home is second to none.
Your Home Your Mortgage aims to arm home buyers and investors with essential know-how and proven techniques to ensure you avoid the common pitfalls of financing a property.
There’s no question the current mortgage environment is one of the most competitive in our nation’s history.
Refinancing provides Australians with a platform to get a better deal on their current mortgage, many of which may have been locked in some years ago at interest rates well above what’s on offer in today’s competitive market.