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Line of credit

With a line of credit, or an "all in one" account, you pay all your income into your loan account. Essentially it all goes to pay off your loan, but you also use your account as your cheque, credit and savings accounts combined – almost like a simple redraw facility. Keeping money in the account can reduce your loan amount and your interest payments.

You have a pre-approved loan amount that you can access bit by bit, or all at once.  This is a very flexible way to borrow, but interest rates tend to be higher than standard variable rates, and there are usually fees.

These loans are more difficult than standard loans for most people to repay because there is no set monthly repayment.