Find and compare line of credit home loans

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2.74%

Variable

2.76%

State Custodians

$685

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

2.70

/ 5
More details

2.90%

Variable

2.92%

State Custodians

$725

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.33

/ 5
More details

3.49%

Variable

3.50%

BCU

$1,500

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.88

/ 5
More details

3.65%

Variable

3.66%

BCU

$1,526

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.88

/ 5
More details

3.59%

Variable

3.81%

Aussie

$898

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.98

/ 5
More details

3.78%

Variable

3.82%

Qudos Bank

$1,547

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.80

/ 5
More details

3.78%

Variable

3.82%

Qudos Bank

$1,547

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.80

/ 5
More details

3.78%

Variable

3.82%

Qudos Bank

$945

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.80

/ 5
More details

3.78%

Variable

3.82%

Qudos Bank

$945

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.80

/ 5
More details

3.84%

Variable

3.89%

HSBC

$960

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.93

/ 5
More details

3.52%

Variable

3.90%

BankVic

$880

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.77

/ 5
More details

3.69%

Variable

3.91%

Aussie

$923

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.98

/ 5
More details

3.53%

Variable

3.92%

AMP Bank

$883

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.93

/ 5
More details

3.92%

Variable

3.96%

BankVic

$980

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.77

/ 5
More details

4.10%

Variable

4.14%

Endeavour Mutual Bank

$1,025

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

1.46

/ 5
More details

4.06%

Variable

4.18%

Coastline Credit Union

$1,015

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.88

/ 5
More details

3.99%

Variable

4.20%

Aussie

$998

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

1.10

/ 5
More details

4.19%

Variable

4.20%

BCU

$1,615

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

0.88

/ 5
More details

3.80%

Variable

4.21%

Beyond Bank Australia

$1,551

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

1.09

/ 5
More details

4.23%

Variable

4.29%

HSBC

$1,058

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

0.93

/ 5
More details

Learn more about home loans

There are many types of loans specifically designed to suit the lifestyle and financial needs of different people at various stages in their lives.

And for those borrowers who have already built up some equity in their home but require a degree of financial flexibility, a line of credit (LOC) loan may be an effective solution to helping them meet their needs.

So how does a line of credit loan work?

Essentially, these loans function similarly to a credit card, where you are allowed to borrow up to a certain amount of money within a fixed period of time set by the lender, but there are significant points of differentiation from other loans, based on how borrowers can manage the process of their withdrawals and repayments.

The key features of the line of credit loan are:

  • During the life of the loan you can withdraw money as you need it and you do not need to notify the lender what the funds are being used for each time you withdraw.
  • As you pay back the principal amount, your creditamount continues to revolve and you can use those line of funds again as you need to withdraw money.  
  • You only make repayments based on how much you borrow, against your maximum, pre-approved amount. This is where the line of credit is similar to repaying debt on a credit card.
  • You can pay back any amount as long as you make the minimum monthly payments set by the lender. Minimum payments may be a combination of interest and principal, or interest only.
  • As the loan structure is not viewed as traditional in nature, the interest rate is usually set above the standard variable rate by banks and financial institutions.

How does a line of credit loan differ to a personal loan?

The line of credit loan is different to a personal loan, where you get a lump sum and you agree a fixed or variable interest rate and have a fixed term for repayment.

As a line of credit loan is secured against your home equity, unlike a personal loan which is often unsecured, the interest rate on a line of credit loan is usually lower than on a personal loan.

How does a line of credit loan differ from a credit card?

As with a personal loan, the interest rate on the line of credit loan is also generally lower than that on a credit card, which is why some borrowers choose to opt for this loan, rather than simply increasing their existing credit card limit or taking on a credit card.

What would you use line of credit loan for? 

In many cases, line of credit loans are used by people whose borrowing needs vary and who therefore want some flexibility around withdrawals and repayments.

These types of loans are often used for:

  • Home renovations and repairs
  • Buying another property
  • Taking a holiday
  • Buying a car

For example, you may have equity in your home and are considering whether you do a major renovation or make a series of repairs and minor alterations.

You don't necessarily know how much money you will need, so opening a line of credit can give you the flexibility to pursue your project knowing you can draw down sufficient money to complete it.

Being smart about your line of credit loan

Financial discipline and organisation will help you manage your debt on a line of credit loan. There are several simple ways you can utilise its features to your full advantage:

  • One common way of reducing the cost of the loan is to have your income deposited into your line of credit loan account to offset the overall loan amount. That way the interest on the loan is only calculated on the remaining balance of the account, which will lower your overall interest charges.
  • Likewise, any planned or unexpected income that you receive, such as a tax refund, can also be deposited into the account as an additional repayment which contributes to reducing the interest payable.
  • Another possible way to manage the loan effectively may be to set repayment amounts above the specified amount as part of your regular fortnightly or monthly budgets. This limits the tendency to use more of the funds without thinking of the financial ramifications.
  • Always remain conscious of the original estimated value of your home that the approved loan amount was based upon. If property values in your area or those within the property market in general are not increasing, be prudent in your use of the line of credit loan so your home equity still remains a comfortable proportion of the total value of your home, against the size of the outstanding loan amount.

What should I be aware of with these loans?

As with every loan, it’s worth evaluating not only the benefits of the loan but also the potential risks, such as the high interest rate attached to these loans compared to other more traditional loans.

Some tips to consider:

  • Remember that this loan is most suited to those who are financially disciplined and remain committed to making regular repayments and gradually reducing the loan.
  • This may not be an appropriate solution for those borrowers who see the loan as a quick fix to a funding shortfall. Those borrowers may find they are still overstretched financially and then have continual problems with their repayment schedule.
  • You need a good credit rating to apply for these loans, so before you submit any applications, check your rating and determine whether you can do anything to improve it. The better it is, the greater the likelihood you'll have of being offered a lower interest rate.
  • As with a standard variable loan, the interest rate on a line of credit loan is vulnerable to the overall market movements of the interest rate environment. Ensure you have a realistic financial buffer in place with the loan to cushion the impact of any series of interest rate rises.
  • Some lenders may also charge monthly or annual fees as well as application fees, valuation fees and discharge fees, so you need to factor all costs into your financial calculations when comparing line of credit loans from a range of different lenders.
  • As with more traditional loans, if a line of credit loan isn't repaid according to the terms of the contract, the lender may be able to seize your property in order to recoup the debt.

Line of credit loans are offered by most banks, credit unions and financial institutions and can be a valuable way of supporting you to manage your finances throughout stages of your life where you require some flexibility as you continue to work towards your goals.

However, with an increasing number of loans to choose from, comprehensive research remains the key to determining which loan will be most appropriate for you and your particular circumstances.

Frequently asked questions

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

What is a bad credit home loan?

A bad credit home loan is a mortgage for people with a low credit score. Lenders regard bad credit borrowers as riskier than ‘vanilla’ borrowers, so they tend to charge higher interest rates for bad credit home loans.

If you want a bad credit home loan, you’re more likely to get approved by a small non-bank lender than by a big four bank or another mainstream lender.

What is an interest-only loan? How do I work out interest-only loan repayments?

An ‘interest-only’ loan is a loan where the borrower is only required to pay back the interest on the loan. Typically, banks will only let lenders do this for a fixed period of time – often five years – however some lenders will be happy to extend this.

Interest-only loans are popular with investors who aren’t keen on putting a lot of capital into their investment property. It is also a handy feature for people who need to reduce their mortgage repayments for a short period of time while they are travelling overseas, or taking time off to look after a new family member, for example.

While moving on to interest-only will make your monthly repayments cheaper, ultimately, you will end up paying your bank thousands of dollars extra in interest to make up for the time where you weren’t paying off the principal.

What is a guarantor?

A guarantor is someone who provides a legally binding promise that they will pay off a mortgage if the principal borrower fails to do so.

Often, guarantors are parents in a solid financial position, while the principal borrower is a child in a weaker financial position who is struggling to enter the property market.

Lenders usually regard borrowers as less risky when they have a guarantor – and therefore may charge lower interest rates or even approve mortgages they would have otherwise rejected.

However, if the borrower falls behind on their repayments, the lender might chase the guarantor for payment. In some circumstances, the lender might even seize and sell the guarantor’s property to recoup their money.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Why was Real Time Ratings developed?

Real Time RatingsTM was developed to save people time and money. A home loan is one of the biggest financial decisions you will ever make – and one of the most complicated. Real Time RatingsTM is designed to help you find the right loan. Until now, there has been no place borrowers can benchmark the latest rates and offers when they hit the market. Rates change all the time now and new offers hit the market almost daily, we saw the need for a way to compare these new deals against the rest of the market and make a more informed decision.

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

Why is it important to get the most up-to-date information?

The mortgage market changes constantly. Every week, new products get launched and existing products get tweaked. Yet many ratings and awards systems rank products annually or biannually.

We update our product data as soon as possible when lenders make changes, so if a bank hikes its interest rates or changes its product, the system will quickly re-evaluate it.

Nobody wants to read a weather forecast that is six months old, and the same is true for home loan comparisons.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

How can I get a home loan with bad credit?

If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.

One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.

Two points to bear in mind are:

  • Many home loan lenders don’t provide bad credit mortgages
  • Each lender has its own policies, and therefore favours different things

If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.

Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:

  • You have a secure job
  • You have a steady income
  • You’ve been reducing your debts
  • You’ve been increasing your savings

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is stamp duty?

Stamp duty is the tax that must be paid when purchasing a property in Australia.

It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.