Thinking about using a line-of-credit (LOC)loan that is connected to the Qantas Frequent Flyers.
–opportunity to earn Frequent Flyer points with your mortgage see http://www.mortgagemiles.com.au for details
The catch is a higher interest rate between 7 to 7.5 depending on which product & a monthly fee.
My proposal is
1.canning my existing Marginal Loan -Used for Shares/managed funds @ a Interest rate 8.15 & using the LOC
And 2 buying investment properties with extra fundsMy question is has anyone got any experience wth these Frequent Flyer Mortgages
Hi there,
we used to have frequent flyer credit cards 15-17 percent interest) but we canned them in favour of
10.99 percent mastercards. Basically, you’re paying for the points in another way.
I would imagine the mortgage scheme would be the same. the half percent or whatever extra basically is the cost of them doing the points thing, passed on to you. Maybe you can work out how many points you’d make and what that’s worth.cheers-
Minijoy to the world
To me the more important consideration is the interest rates charged, fees charged, borrowing criteria and serviceability assessment guidelines, capacity for portability if that is an issue, redraw features and costs, offset capabilities and so on.
Frequent flyer points are not the main game in town and it seems you are being distracted from the end game.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
It may work for people like me who have family overseas and would love to accumulate frequent flying points quickly – especially if they are partly funded by the tax man.
How many points a month do you get for a $200k loan?
Thanks for the replies
You are correct to mention that maybe I am a bit distracted from the end game – positive gearing!
I totally agree you seem to pay for this extra benefit with an increased interest rate.So you need to your sums.
On a average loan of a $250k LOC it can work out approx over 260 000 points @ end of year 3.To my way of thinking extra benefits of say an OS holiday with my family from a Frequent Flyer program is just a bonus.-partly funded by the taxman
Also in my circustances the LOC rate is less than my existing Marginal Loan rate, so I will be gaining in that department-regardless of wat loan product I take.
CheersI considered refinancing to bankwest (I think) a few years ago, purely because of the frequent flyer points program it was attached to, but after I did my sums the extra interest paid because of the higher interest rate would have bought the same amount of air travel anyway. I would rather have the cash instead of points. Ansett then went broke 6 months later and I would have lost all the points anyway.
Dont do anything purly for the points, fly buys points are worth about 0.7c each, and every time I fill up with petrol, I see someone buying a handfull overpriced snacks, I can only presume to get the points. Big deal, you get 10 bonus points (worth 7c) for buying a chocolate bar at double what it costs in a supermarket. (what th’??)
I have also heard that if you accumulate over a certain number of points from business credit cards, and probably IPs where tax deductions are being generated, those points may be subject to FBT.
Dont go there, it really isnt worth it.
Pete
” higher interest rate would have bought the same amount of air travel anyway. I would rather have the cash instead of points.”
yes indeed!!! Pete Bell. My partner and I sat down one night and calculated how much you have to spend on the card to make the 30,000 points that gets you a free return trip to NZ worth 489 Qantas. The points are honestly not worth it and you are paying for them whether you know it or not.
Credit cards are great but 8.99 percent, 10.99 percent minus the points, or 17 percent with, and I know which I’d choose because I’ve done the numbers!! Check the yearly account fees too and deduct that from your ‘free’ airfare too – the points cards cost loads more per year than the non points cards.
cheers-
Barbjoy to the world
Did you take into account that the points earned has cost you in deductible expenses eg. the interest is deductible and the airfare is not income.
eg. I dont know the figures but lets say.
You get $30000 points a year by paying an investment loan with ANZ – it costs you $500 in extra pmts – the diff between discount var and var rate.
But to fly to NZ costs $489. But you need to earn $990 in before tax dollars.
I have not done the sums. Has anyone done the sums on a $200k loan with ANZ home loans and linked to frequent flyers. How many points a month do you get on such a loan.
Talking Credit Cards for a sec, I love my CC, it costs $49pa and I reckon I’ll get about $200 worth of petrol and vouchers this year.
The only time it is worth getting points is when you have to buy whatever it is anyway and you have found the lowest price. eg I would rather pay 95c/L for petrol with no points than 96c/L with points.
The interest rate has absolutly no bearing on which card I would use, as I have never paid any interest on the card anyway. What I look for is a long interest free period, in my case it is 62 days. I put ALL my expenses on the card and pay it off before the interest is due. I rack up about 30,000 points pa. Last year I got a letter from the bank asking if I wanted to change my points into a cash rebate off the next bill. Yehaa – I got I think about $580 for about 70,000 points. That really was money for nothing…
Pete
yack, good point,
never thought about the tax thing…pete bell, you nailed it though,
“I have never paid any interest on the card anyway.”if you are that good with credit cards then yeh it’s probably worth paying $200 a year cardholder fee or whatever it is, for 30,000 worth of points – though you’d have to spend 50k on the card to get 30,000 points. $1 for 1 point up to 10k and then $2 for 1 point.
Then as you said Pete, even 70,ooo points are only worth $580 – the bank said so.
Recently I was flying a friend over from NZ. It cost me $99 each way. So I reckon points (30k points being worth a 489 airfare ) aren’t worth it unless you particularly want to fly Qantas not Virgin. Also it seems like whenever you want to use your points like school holidays or Christmas, there’s either a points black-out (like over Xmas) when the airlines charge as much as they want (800-1000) or else the handful of frequent flyer tickets they may available are already gone. So you save them up and then you can’t even necessarily use them when you want. So basically I haven’t missed collecting points off my credit card – I already have so many just from flying around on tour etc
joy to the world
I rang the ANZ.
They told me the following;
eg. $200k loan.
1. On drawing down the funds you get 25% of laon eg. 50,000 points.
2. For every 12 months you get 5% of outstanding balance eg. 10,000 pointsYou pay variable rate (no discount) and full establishment fees.
yack, so what do those points actually get you? i have to admit total ignorance to this sort of stuff.
does it break even?
cheers
brahms
Mortgage Broker
[email protected]I follow Petebell’s routine and pay my CC each month. The annual fee for the card is paid from the accumulated points. I try to buy everything on the card because I get a statement each month lsiting my spendings. I also download all these things to my computers MYOB and keep track of things that way.
I think its great.
Regards Marsden
I have not really worked it out.
On $200k loan – you pay an extra $500 a year.
ie. $200k * .05% = $1000 and then after tax = $500
(assuming its a property invest loan and your on highest marginal tax rate.To fly around the world you need 120,000 qantas frequent flyer pts.
You get 50,000 in first year then 10,000 a year. (loan balance $200k * 5%).
So after 7 yrs you have 120,000 pts.
So that means you paid $3500 in after tax dollars. And you need to earn $5000 to pay for a $2500 air ticket.
I am not sure if I am comparing apples with apples here. I am assuming you have a property investment to claim the interest and you need to earn $5k in before tax dollars for the ticket.
But I seem to think its worth it.
Please check my figures and tell me what you think?
I am still of the opinion that dollars are better than points.
I would never trade dollars for points (by paying more than I need to)
The way I see points is that they are last thing to consider. ie all things being equal I will buy from the retailer who has points on offer, over the retailer who is not offering points, and ultimately this is what the retailer is trying to get customers to do.
I collect any points that are on offer when I need to spend, and then change them into free petrol vouchers, myer vouchers, or cash if I can or to just waive the annual fee on the card.
The annual fee is waived by about 8000 points, and the rest usually goes on petrol vouchers at 3600 points = $25.
Points accumulate at a rate of one point per dollar (upto 200,000pa)
As Marsden said, I also like the way that I get a complete transaction record for the month, on the statement.
Pete
Sorry – the title of this thread is frequent flyer MORTGAGES not credit cards.
There is a frequent flyer credit card thread in the Opinionated folder.
Appologies to those offended, I was merely talking about my experience with the Ansett frequent flyer linked mortgage, which then got onto the point (pun) that the points are rarely worth getting if you have to part with any extra cash, be they from a credit card or from a mortgage.
Whatever…
Pete
<<<Ansett frequent flyer linked mortgage>>>
Ok. That was unfortunate. Alot of my colleagues lost their points too.
But now with Qantas frequent flyer and the ANZ do you think its worth it?
OK, I just went to the ATO website
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr9739.htm
and it looks like the rumor I heard about points being subject to FBT (past a certain number of points pa) may not be the case. However, I think that at the end of the day, what you are really after is the best deal, and I think that revolves more around the interest rate, fees, and features of the loan, moreso than getting points that you may oneday convert into somthing of value.Pete
I dont believe doing this involves FBT.
FBT is bourne by an employer. There is no employer here. I have an investment property with a fequent flyer points attached home loan.
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