OK, so this may be my next dumb question but if I’m not using cash as deposit then what should I be doing with it?

Hi Terry

Thanks so much for your comments.   In response:

1.  I will definately call the credit card company – considering the amount of interest we've already paid to them over the past year or so I'd like to think they would take that into account and work with us to help pay it off.

2.  I have spoken with the ATO and we have set up a monthly payment arrangement.  Still not ideal but much better for us to manage. 

3.  I met with my bank today about splitting the loan.  He told me they could fix the entire amount of the loan and lock it in for 3 years and then apply for a variable loan at a better rate of 5.6% for just the credit card debt of $22.5k ???    This seemed strange to me as I thought I would have to have a small amount in the variable portion of the loan (around $20k) then add the extra $22.5k credit card debt onto that ??    This would be perfect for us but it wasn't until after our meeting that I thought how can we possibly get a variable loan for a credit card debt but at a home loan variable rate of 5.6%?!?!?

4.  –  I'm not understanding what you mean – sorry

thanx again

Hi Shahin,

our credit card has been over the $22.5k limit for the past 4 months with hardly any amount being put on it..   Plus we had to hold our mortgage repayments for 3 months last year due to financial hardships.  Husband hasn't had a steady income for over 12 months due to operations, loss of business, etc. but has now secured a full-time position with BHP.  He starts this Monday so we have a contract but no stable work history.  We are also paying off a $10k ATO bill.    Have 2 car loans.     We are getting our life back together now, but very slowly and the weight of our credit card debt is the main issue for us.   

Hi jamie

its an IP so I definitely don't want to incorporate the bad debt into my loan.  Which is why it was suggested that I split the loan and keep the absolute minimal amount in the variable portion plus the cc debt. I just don't know what the best thing to do Is!  All I know is that I've got to move our cc debt into seething manageable and I want to pay it off ASAP so I can then move onto our 2 car loans and get rid of those too. 

Hi Jamie

We didnt pay LMI but only have an 85% lending value ration which could make it tough.  He suggested we apply for the possibility of a split loan with as much as possible going into the 3yr fixed rate account and only minimal in the variable account with the added $22.5 credit card debt going into that.  One thing I didn't ask was the possibility of paying off the smaller variable account early.  I have an appt with the bank later today, so will have to write down a list of questions, etc for that one!!!

Nathan & Jamie,

Thankyou so much for your invaluable advice.  I couldn't get my head around this advice (and obviously for good reason).  Unfortunately it came from the Bank (Big 4) – scary isn't it !!!   Makes you wonder how many people are getting the wrong advice and actually going through with it.

This website is a Godsend for people like me and I appreciate all the time and effort that everyone has put into ensuring I dont make a huge mistake.

Considering my situation, should I be combining the 2 loans into one – as only the larger of the 2 loans is linked with an offset account.  That way, the 2nd loan of $136k will be joined with the larger one and thereby offset?

Thankyou

boshie

Thanks for your replies everyone…

Unfortunately, because of hubby's brain surgery mid 2012 and subsequent loss of work thereafter, we would not be in a position to apply/refinance for another loan if they need to check our figures, etc.

Can I clarify that perhaps our best option is as Tom said::

"You will need to segregate your loans into deductible (PPOR loan which will become an investment) and non deductible (credit card, etc). The deductible loan becomes IO, the non deductible as P&I with offset account linked to this non deductible loan as well. Any excess funds to be put into the offset account."

It's easy enough to combine the 2 investment loans into one (its for the one PPoR).  Just not sure how I would gain a non-deductible loan for credit card, without having to supply figures to the bank??

Hi Tom,

Thankyou for your reply.  Just wanted to clarify what you think I need to do.

I have 2 investment loans and one credit card debt of $22.5k.  The bank Advisor suggested I incorporate all 3 debts into the one loan which would be IO with offset account, and therefore much more manageable for us.

Are you suggesting I should only refinance the 2 investment loans into one, keep it IO with offset account.  Then I dont understand what to do with the credit card debt to make it more manageable for us.  We got into so much debt because my hubbie had unexpected brain surgery mid 2012 which (needless to say) was quite expensive – not to mention time off work as he is a self employed builder!  So we are now trying to get ourselves back on track, but in the meantime have managed to accumulate quite a large (and unmanageable credit card debt).

We are moving back to Melb to live with parents for a while until we get sorted out again financially.  So we plan on renting out our PPoR in Sydney.

We dont have any spare cash at the moment and need to fund our move to Melb, so I really need to clear off credit card debt and start afresh.  Hubby now has a fabulous job which will enable us to pay off our credit card every month, but until then we need to fund our move to Melb.

Not sure what to do!!!

Thanks for any advice

Thanks Shahin and Jamie for your replies.  I appreciate your time.

Nigel,

We did think about selling the property however our chances of getting another loan right now are not great.   We figure it is best to keep what we have in Sydney, get hubby in a stable working position, then in 6 months time we would look much more favourable to the banks.

Thankyou Ryan and Richard for your comments – much appreciated.

Richard, I notice you're in Qld but do you have clients you work with in Sydney?  If so, we would definately be interested in getting some expert advice from you regarding our current situation and, more importantly, our future goals.   Or, can you recommend anyone in Sydney we could speak to as I'd really like to get a 2nd opinion on how we can move forward or make changes to get us moving forward.
thankyou,
boshie