Hey guys,
Not sure if people already do but I was thinking of increasing my home deposit by $30k by using credit card and then using balance transfer offers upto 32 months to pay it off. In this way, you don't pay interest on $30k and your monthly repayments are low, which means you can save and pay the remaining $30k.
That's just my idea, not sure if it's practical.
Shouldn't be an issue if you're not looking to get another loan.
In the instance you need the borrowing power just pay off the balance transfer.
In the instance you need the borrowing power just pay off the balance transfer.
With what though? Taking it from the deposit brings you back to square one.
Credit cards have a very negative impact on borrowing capacity. They look at the balance and the minimum required repayments (usually 2-3%) to calculate your ability to pay your loan. So a $30k credit card means $600-900k a month less capacity to repay your loan. That can mean $100k+ less borrowing capacity.
increasing my home deposit by $30k by using credit card
Not sure if that's considered as cash advances with no interest free period ? Then you balance transfer that cash advances balance to another CC ?
Firstly you need to have $30k on your credit card worth of debt to be able to do a balance transfer.
Citibank used to allow you to cash advance I think it was 80% of your credit card limit without fee, and it was interest fee (I think it might have been a year). I did this.
Citibank used to allow you to cash advance I think it was 80% of your credit card limit without fee, and it was interest fee
It's called 'Cheque to Self' , rather than typical cash advance that attracts interest fee on day 1.
It was interest free for a while with no fees when I did it.
Found this old forum topic. So it must have been around this time
Not sure if people already do but I was thinking of increasing my home deposit by $30k by using credit card
A few things that come to mind:
If you have the capacity…put all expenses on the first CC, divert the funds to savings.
Open the home loan, balance transfer to new CC.
Alternatively open new CC and BT to put original card in surplus, transfer cash out.
Isn't that citibank debit loan
I did this after I had the home loan, just put 100% of my expenses on a CC with an interest free period then balance transferr that amount around to keep it interest free. Lets me stay 30k ahead of where I would otherwise be on my home loan. With interest rates where they are its worth it. I will just have to redraw & pay off the CC if I ever need another loan. Having CC debt significantly reduces what you can borrow.
Experienced investors will tell you that they hate risk and avoid over leveraging. As simple as that, in addition to anything else by other comments.
They do, although your debt severely limits what you can take out from the bank.
So you're generally gonna pay a 3% one-off fee for the cash advance plus interest calculated daily at more than 21%. Do you have some awesome card that offers free cash advances?
When you apply for the home loan the bank will ask for a copy of your credit card statement, I don’t think they will look favourably on somebody with $30,000 of credit card debt.
They will also ask for a copy of your bank statements and will likely question where the one off $30,000 deposit came from.
i was pretty certain that a 30K credit card has a >30K impact on borrowing capacity. can anyone confirm or deny? would be super helpful to know
Definitely, since credit card rates are higher than mortgage rate, meaning servicing amount for the same amount would be higher for credit cards.
You can test it yourself by using various banks’ borrowing power calculators.
I’m sure there’re other reasons as well but having an extra 30k worth of credit card debt/limit would severely impact your borrowing power.