Not the best product, but it's a useful niche. As mentioned previously in the thread, the 20k credit card would be used to bridge the gap in covering some/all your govt charges and allow a larger amount of your deposit funds to go against the property.
The product is useful if you don't have a sufficient deposit to cover a min of 95% including govt. charges, but it in any other case it can be an expensive option for small benefit.
5% genuine savings generally req'd by all lenders, however a number of them will allow non gen up to 90%, and some will do 95% borrowed funds for deposit at a loaded interest rate.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Thanks, All.
Pretty informative stuff. One thing I still don't understand – What is the LOC for when the Visa card seems suffice (other than for the purpose of keeping the Visa opened, as per Grant's explanation)? I mean if the main home loan amount was not sufficient, why not include the LOC with the main home loan in order to get the cheaper rate (0.10% less). On the other hand, if the home loan amount was sufficient, then why need the LOC at all? If the LOC is not used, there won't be any interested charged, right?,
I noted that the VISA maximum is $20K. Does this mean that if the borrower already has a personal loan, or car loan or overdraft for $20K, the chance of the VISA being approved is non-existent?
Regards,
Jenny
Jenny, almost all credit cards are unsecured, however in this case the LOC is there to "secure" the credit card against the property. Fallback for the lender.
As for personal loans, etc, their monthly expenses and liabilities would have to be allowed for and approval would be based on the overall strength of the application.
Cheers
Tom
Thanks, Tom – your explanation has cleared the clouds.
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