Never use a LOC as the main loan! Just remember: Depositing money into a loan is a permanent repayment to that loan. Withdrawing money from a loan is new borrowings What this means is that if you start off borrowing $100,000 to buy a house and you pay down the loan to $99,000 the amount of the loan associated with the purchase of the house is now $99,000. If you later withdraw $100 to buy some groceries the balance will be $99,100 but it is now a mixed purpose loan with $99,000 being for the house purchase and $100 being for the private expense of groceries. As time goes by further deposits will make things messy and further withdrawals even messier. At the end of the day you could have a loan of say $80,000 but none of the balance relating to the purchase of the house. Normally this will not be an issue but if you ever rented out the house none of the interest on the loan would ever be deductible. So avoid using a Line of Credit loan as the main loan where income will be deposited and expenses will be withdrawn. There used to be debt reduction companies pushing this strategy - which is a great strategy for paying off a loan, but terrible from a tax point of view. The same benefits can be obtained by using a 100% offset account to save interest and there are no tax issues when money is withdrawn from the offset. Best of both worlds. LOCs should only be used to access equity for further investing.