The benefit to this type of loan occurs when you are not sure how much money you will need. For example, you have a small business. From time to time, you have the opportunity to buy products at greatly reduced prices from distress sales. You have to act immediately when the opportunity presents itself, but you do not know how much money you will need for any given purchase.
If you borrow money and wait for the opportunity to arise, you will pay interest on the amount you have borrowed. When the opportunity finally comes along, you may need much less than you borrowed. If you apply for a loan when the opportunity arises, the opportunity may disappear before the loan goes through.
Another good use of the loan is purchasing another property. You can take advantage of distress sales by offering to purchase the property immediately. Other buyers may have to make offers contingent on getting a loan. You are, in effect, a cash buyer. You can almost always get a better deal when you buy this way. Investors usually have a line of credit available. When they come across a profitable venture and the seller needs the cash right away, they are in a position to act.