Line of Credit, also known as Equity Lines, Revolving Credit or Evergreen Home Loan, works more like a credit card and provides increased flexibility.
The lenders assigns you a credit facility limit, secured against your property and when you need cash you draw against that limit. As you pay back the loan (the terms of repayment vary), the money becomes available to you again. Line of Credit (LOC) loans usually attract a slightly higher rate of interest than a loan where the balance is continuously reducing.
The advantage of a line of credit over a regular loan is that only interest is charged, not principal, on the part of the line of credit that is used, and the borrower can draw on the line of credit at any time that they choose to. However, the greatest advantage of a Line of Credit is that you always have ready access to money, which makes this type of loan attractive to investors.