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Strategy #1 Limit Credit Card Limits To Secure More Funds
If you are like most Australians, you probably have at least one credit card. Accordingly, to the Reserve Bank of Australia (RBA), there were over 16.5 million credit cards in circulation in Australia in June 2016. With Australia’s total credit limit now at a record high of almost $150.5 billion, this averages to a credit limit of $9,121 for each credit card!
Credit cards are great for tiding us over a cash emergency or for earning reward points, but... Did you know your emergency line of credit could actually affect your ability to borrow and get in the way of getting your next investment property or that house with great development potential?
You may say, “I don’t have any issues with my credit cards, I always pay off my credit card on time!”
DID YOU KNOW
Every $1,000 you have on a CREDIT CARD LIMIT will lower your home loan borrowing capacity by approximately $3,600!
The keywords are CREDIT CARE LIMIT! Not the amount your owe!
Even though you might only owe $2,000 on a $25,000 limit credit card, lenders will still take the limit of $25,000 into account when assessing your loan. This is because your limit re ects how much you could go out and spend tomorrow.
Whilst this doesn’t sound like much, if you have a $25,000 credit card limit then you’ve just lowered your borrowing capacity on your loan by over $95,000 – that’s a lot of borrowing po
DID YOU KNOW
For some loan products, lenders automatically add a $6,000 credit card to your application even if you didn’t ask for it! This adds unnecessary credit limits that will affect your future borrowing capacity.
This shows how crucial it is to know how to properly structure your loan application and not just your loan.
For example, if you have a credit card and you owe money that you can’t pay off during the application process, it may be a good idea to do a ‘balance transfer’ so you can transfer the amount owing to the bank you’re applying to for the loan. You will save more money on fees when you bundle your existing credit card with your mortgage. Some lenders will also assess your loan application more favourably if you switch over your credit card balance.
Neil Carstairs
Neil Carstairs is the founder of Mortgage Corp, an active property investor and awarding winning MFAA credited finance broker with more than 10 years mortgage broking experience. Currently, Neil is one of only 19 MFAA Certified Mentors in VIC/TAS region.
Neil specialises in helping successful professionals and investors build & grow your property portfolio through strategically structuring your loans for long-term investment success. He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not.
Thanks to his dedication to clients’ success, Neil has consistently receive 5 star client reviews and has been called, by his clients, “Miracle Mortgage Man” “Trusted Friend, Mentor and Educator” “God-send”…
To find out more about Neil Carstairs and Mortgage Corp, visitwww.mortgagecorp.com.au
