All Topics / Creative Investing / Construction loan question

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  • Profile photo of grantos_champosgrantos_champos
    Member
    @grantos_champos
    Join Date: 2009
    Post Count: 106
    August 17, 2011 - 6:07 am

    hi all,

     

    I got chatting with a mate at work who is building his ppor. They took out a construction loan to cover the building costs. We came up with a question that has probably been asked a few times before.

    Could you pay the construction costs on a credit card @ 60days interest free. Then cover the credit card bill with the construction loan funds 59 days later? effectively saving you 2 months worth of interest on the loan. Is this even possible/legal/worthwhile? Also how would this differ for ppor vs ip?

     

    Cheers

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    August 17, 2011 - 8:06 am

    Simple answer- no you can’t….

    You can’t use credit to pay for credit- The credit card company don’t care! but they will chagre you interest on it from day ONE ( it’s not interest free!! as it’s a cash in advance…not a “purchase”) …the bank however will not lend you the money if you used credit to pay for credit + the bank always write out a cheque to the BUILDER for the construction loans ( fund’s controlled)

    P.s you could use credit card to pay for another expenses on this PPOR or IP….

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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