s WARNING: Do you really need a loan today?*

It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:

  • For information about other options for managing bills and debts, call 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.
  • Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
  • If you are on government benefits, ask if you can receive an advance from Centrelink:

The Australian Government’s MoneySmart website shows you how small amount loans work and suggests other options that may help you.

*This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009


What is a home equity line of credit ?

A home equity line of credit is a loan made available to the lender using the borrowers equity in their house like a mortgage.

This is usually made available to the borrower as an account off their home loan and they may use it at their own discretion.

Most people would get a home equity line of credit for a specific purpose like home renovations etc.

A home equity line of credit works much the same as a credit card, however with a much better interest rate. You can withdraw money as you need it without incurring cash withdrawal fees.

How much you can borrow depends on the amount of equity you have available in your property.

Equity is the difference between how much you owe on your home or your mortgage and how much it is worth.

When applying for a home equity line of credit you will be required to get an appraisal or valuation on your property, so as the lender can confirm the current market worth/value of your home.

This will determine how much equity you have in your home and how much the bank is willing to lend you.

Lenders will not lend you 100% of your equity, this is due to the fact that if for some reason you are unable to meet your repayments there is a buffer amount to give you room to repay the loan. If needed the lender can also sell your property to regain their costs and outlays.

The lender usually set a cap at around 80% for a home equity line of credit .

home equity line of credit

What if I have had bad credit loans previously?

If you have a bad credit history you may need to shop around or use a broker to help you refinance the right way. This will help your chances of success through offering the bank all the information they need the first time and ensure your application looks well put together.

Trying multiple lenders and being rejected can actually affect your credit history and your chances of getting the loan you want!

Other lenders will be questioning why the last lender didn’t approve your loan and the loan enquiries and rejections will be listed on your credit report.

Also the kind of lenders that you have used previously can hurt your credit rating also because some lenders see that as a higher risk than some of the more popular lenders.

If you use a broker they can look into your credit history first and identify any potential problems and help you fix them before you apply for your next loan.

You can also enlist the help of a credit repair company, (they do charge a fee so ensure you get a written quote before you agree to allowing them to do anything on your behalf). They help identify why you are being knocked back for loans or why you have a bad credit rating.

If they can identify any entries that are false or not yours, they can help delete those entries from your credit report to help your credit woes clear up!

If they are, your bad credit entries they may be able to help you negotiate with the debtors that made the entry to enter into a payment agreement or have the entries removed.

Therefore, it is not impossible to get an equity line of credit with bad credit however you need to be smart about how you go about it and get some help before you start applying for loans.

Contact a broker, ensure you have all of your bad credit history under control and have a plan of action to prove to the lender that they can have confidence that you are going to be a good borrower in the future!