How can I minimise the interest I have to pay?

You can save money on the interest payable over the life of your loan by using your income to offset the loan amount. This can be done by depositing your income into the loan account and then withdrawing money as needed to satisfy your living expenses from the line of credit. With this method, the interest on the loan is only calculated on the remaining balance of the account, which will lower your interest charges.

How can I protect my home?

From a lender's point of view, it has the security of your home in the event you default on the loan. If your property declines in value, you will end up with less equity and you could even end up owing more on the loan than your home is actually worth. This is why it's a good idea not to borrow or use the full amount of equity available. Always leave a buffer.

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

Line of credit loans typically have much lower interest rates than personal loans . If you're disciplined in paying off your line of credit, you could potentially save thousands of dollars in interest. Let's look at an example. Line of credit Personal loan Borrowing amount $10,000 $10,000 Length 5 years 5 years Rate 5% 14% Monthly repayment $188.71 $235 Over the course of the personal loan, you would pay $4,117 in interest. With a line of credit rate, you'd pay $1,322.74 in interest. That's a saving of more than $2,794 over 5 years. However, this requires the discipline to repay your line of credit loan in a timely manner. If you ended up letting your line of credit loan stay open for 15 years, you would end up paying $4,234.29 in interest, eclipsing the amount you would have paid on a personal loan.