Line of Credit Home Loan
Written by True Tamplin, BSc, CEPF®
Updated on August 18, 2021
It differs from a home loan by acting more like a credit card; it has a pool of funds that you can withdraw from, pay down over time, and then spend again.
Line of Credit Home Loan FAQs
Line of Credit (LOC) Definition
What Is a Line of Credit and How Does it Work? Revolving vs Non-Revolving
Lines of credit will either remain open, or will close, once the loan has been repaid.
Revolving lines of credit are considered “revolving”because an individual’s credit is replenished when some or all of the outstanding debt has been paid off.
Non-revolving credit usually has a lower interest rate.
How does a Line of Credit Work? Secured vs Unsecured
Credit card loans are almost always unsecured, which causes creditors to take on more risk and is why credit card interest rates are generally higher and the borrowing limits are generally lower than secured loans.