Line Of Credit Loan

What is a line of credit loan?

A line of credit loan is a defined amount of money you can access whenever you need. It can be repaid immediately or over time. With this loan, you only pay interest on what you borrow, not the total amount available. 

How is a line of credit different from other loans? 

Unlike traditional loans where you receive a lump sum upfront, with a line of credit loan, you have ongoing access to a set amount of money that you can borrow from as needed. 

With loans such as mortgages, you pay interest on the entire lump sum. However, with a line of credit loan, you only pay interest on the amount used. This flexibility makes it suitable for managing fluctuating expenses, miscellaneous or unexpected costs such as: 

• Property repairs
• Education costs
• Business expenses
• Car accidents

What is a home equity line of credit (HELOC)? 

A HELOC is a type of loan that allows homeowners to borrow money against the equity they have built up in their home. It works like a revolving line of credit, similar to a credit card, where you can borrow funds as needed up to a certain limit. 

HELOCs typically have variable interest rates and may have minimal or no closing costs. However, since your home is used as collateral, failing to repay the loan could result in foreclosure.