Ahem, the house renovation costs blew out a bit. Now I have more than $50K in credit card debt and also a maxed Citibank Readycredit account (which is not a credit card).
By doing some juggling, all credit (except 1) are on around 7% interest balance transfer deals.
I am now finally selling my house and buying another one that is $170K cheaper.My problem: Credit card limits seem to have a big negative impact on serviceability calculations.
Questions:
1) Can I in my new mortgage application say that part of it will be used to pay out and cancel most of the credit cards?
2) Is the Readycredit facility treated differently in the calculations for serviceability?Thanks in advance for any advise or help.
Hi
Don't worry too much, one of my friends owed $230,000 on credit cards at some stage!
You an tell the lender you will be using some of the funds to pay out credit cards and this should mean they won't need to be taken into account for serviceablity. But be careful. Some lenders will be alarmed if you have too many credit cards you wish to pay out! Readycredit is just a credit card with a cheque book facility, so it is treated the same.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Sounds like a plan…….in your loan application, depending on the lender, you will find when you list the liability of each card, it will ask if the facility is to remain after the homeloan is drawn down. If you show as no, and that some of the funds will be used to pay out/consolidate these debts and cancel the cards you should be ok, and they will not be counted when your servicability is involved. The lender may be more comfortable, or even stipulate it as a condition that they control this part of the funds on your behalf, to actually pay the cards out. A good lender or broker should ve able to walk you through that – which of course will exclude your average Bank manager or junior bank lending plebe. All the best with your new plans.
Right-o, thanks for the advice. It should be all sweet then.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
