Loan types
Revolving credit — your pay works harder
A revolving credit facility works like a giant overdraft secured against your house. Your salary goes in, your spending comes out, and interest is calculated daily on whatever the balance is. If you're disciplined, it can shave years off your mortgage.
How it works
Say you have a $50,000 revolving credit limit. Your balance starts at $50,000 (you owe the full amount). When your $7,000 pay hits, your balance drops to $43,000. Interest is now calculated on $43,000 — every single day until you spend it.
Over the month, as you pay rent, groceries, petrol — the balance climbs back up. But for those days and weeks where your money was sitting in the account, you were paying less interest. Over 30 years, that daily interest saving adds up to thousands.
There are no set repayments. Your only obligation is to keep the balance below the credit limit. The rate is floating (variable), which means it's higher than a fixed rate — but the daily balance reduction usually more than offsets the rate difference.
Who it suits
- —Disciplined spenders who won't treat the credit limit like free money
- —People with regular salary income (the bigger and more frequent, the more it saves)
- —Those who want to reduce interest without changing their spending habits
- —Homeowners who keep a cash buffer and want that buffer working against the mortgage
Pros and cons
Pros
- Interest calculated daily — your pay reduces it immediately
- Can save tens of thousands over the life of the loan
- No break fees (floating rate)
- Full access to funds at any time — like a savings buffer you can draw on
Cons
- Higher interest rate than fixed
- Dangerous if you're not disciplined — you can spend back up to the limit
- No forced repayment structure — requires self-control
- Not ideal for large balances (rate premium hurts more at scale)
How much should you put on revolving?
Most people use revolving for $30,000–$80,000 and fix the rest. It works best as a complement to your main fixed loan, not a replacement for it. The sweet spot is usually 2–4 months of income — enough that your pay genuinely sits there reducing interest, but not so much that the higher rate eats the savings.
Compare this with an offset mortgage — they achieve similar outcomes in different ways, and only some banks offer both.
Could revolving credit save you money?
It depends on your income pattern and spending habits. We'll run the numbers and tell you honestly whether it's worth it for your situation.
