This is a mortgage secured credit facility where an overall credit limit is approved by the lender and may be drawn down at any time for any purpose up to but not exceeding the approved limit.

These loans are usually taken by people who already own a home or have good equity. For example, if you own a $400,000 property outright, you can usually arrange an Equity Access Loan (EAL) of up to $320,000 or 80% of the property value without arranging mortgage insurance. If you have a $100,000 home loan limit outstanding , your lender will be able to approve a separate EAL for a limit of $220,000. Of course, approval will depend on your ability to prove sufficient income to qualify for the loan.

Equity Access Loans can be used in a variety of ways including:

• Purchasing a home - This is not common as the interest rate on
     EALs is generally higher than on normal home loans. It is also an “Interest Only”
     facility with no built-in structure to reduce the debt long-term.

• General or consumer purposes - Interest rates on EALs are much lower
     than personal loans or credit cards. Many borrowers establish an EAL for
     the purchase of general non tax-deductable goods such as household items, travel,
     clearing other personal debt, purchase of vehicles etc.

• Investment purposes - such as paying the 10% deposit on an investment
     property, or purchasing a property or shares. The EAL must have a different
     account number to your normal home loan account so it can be operated separately
     for tax reasons.

• Business purposes - if permitted by the lender. The EAL must have a
     separate account number for tax reasons.

What is an Equity Access Loan (or Line of Credit)?

How can an Equity Access Loan be used?

Are regular monthly payments required on these loans?

Can I use my Equity Access Loan for different purposes at the same time?

If I make lump sum payments, can I access this money again?

Can I leave my Equity Access Loan on a nil balance?

Am I charged interest on the whole credit limit?