I think everyone knows my current situation in my plan, of saing 35K and buying a 200K house, using 20K as a deposit and using the 15K in offset for the renos then moving out after 6 months to rent(maybe to wrap).
Last night I was trying to find out info on the net about LMI and how much it would be, well with the above situation it would cost about 2K.
Ok, I have another strategy.
Have a CC with a 1K limit, buy 200K house, use 35K deposit, then up the limit of CC to desired amount for renos, pay CC off really fast, then the interest will be small(maybe nil), the LMI in this case should drop to 1K(instead of 2K).
Also the bank will more likely want to lend to someone with a 35K deposit then a 20K deposit, this may help me in getting a cheaper interest rate, and in general help me to get a loan.So, what does everyone think about this CC idea??
Christopher Fife.
bank wont up your limit with all that debt. plus it would probly be a violation of your mortgage agreement.
When banks consider your risk level they take into account your total debt possible scenario.
Unfortunately they will consider your limit on your credit card to be at 100% when they make the check.
Thus if your limit on your card is $10,000 but you have not touched any of it yet the bank will assume that you are already $10,000 in debt.
So in your case the bank will consider your $35,000 deposit less the full limit of your cards borrowing capacity which in the example I gave above would leave you with a deposit of just $25,000 to a banks thinking.Must admit i dont know a lender that operates this way
the bank will consider your $35,000 deposit less the full limit of your cards borrowing capacity which in the example I gave above would leave you with a deposit of just $25,000 to a banks thinking.
Most lenders will take a percentage of your credit card limit (Usually 3%) and this will be considered a monthly liability. In saying this wehre you can produce evidence over a 3 month period that the card is paid off each month then the liability is considered as Nil.
Use of a CC is not a bad idea at all to avoid LMI.
Richard Taylor | Australia's leading private lender
Thanks for your replies guys,
So this is where i'm at;
I get a credit card and say with a 10K limit(seems practical in this scenario), I pay for normal expenses with it; petrol, transport, etc. I get one of those 30(or 55) day interest free ones, so that I borrow on it and pay it out and pay no interest. I do this for say 3-6 months prior to engaging with the lenders(for the mortgage) and they can see from my documents, that I do have good paying habits. From what your saying Richard, this liability would be nil.(e.g.It wouldn't harm my position of borrowing).But can it help. In that they can see that I have taken on debt before and that I have payed it back everytime before the interest kicks in. So will they consider me to be more reliable???? and hence make it easier to lend to me?
Best Regards,
Christopher Fife.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
