I'd say the main difference is that Literature is a lot more independent than English. For the most part, it will be your own ideas and you'll get to choose the best format for structuring your essays.
If you're comfortable with English so far, then feel free to stick with English. A lot of the VELS curriculum is geared towards preparing you for VCE English, whereas Literature represents a break from the somewhat more structured nature of English. If you're currently thriving with concrete models for essays, languge analysis, oral presentations and you just generally prefer it when your assessments are more instructional, then it would definitely be
safer to continue with VCE English.
But you mentioned that you love reading, which leads me to think that you probably wouldn't struggle with Lit. I know I enjoyed Lit a great deal more than I ever did English (I went from a C+/B student in year 10 english to a straight A+ student in year 11/12 english lit), so it's entirely possible that you might do even
better in lit than you are currently. Like Lauren said, and like everyone else will tell you, when the scaling for a subject is a matter of 1, what's "better" for your ATAR is going to depend a whole lot more on what/how you prefer to study.
A good overview of the course structure for Lit can be found here:
EZ's Guide to Succeeding in VCE Literature