Wow! Does having 80k available on cards not destroy your perceived serviceability though?
Good point, and yes, it does. In our case, we were fortunate to have enough servicability for that project even with $80K in credit cards. You're right that lots of people wouldn't - but then again, if you don't have that much servicability, you're less likely to be doing a development of a size that would give you $80K worth of problems
But prior to embarking on a development or renovation that has potential for hiccups (as they all do
), I'd certainly ramp up the credit card limits to whatever you can, just in case. Even for a standard $400K residential property with a reno, I'd want $30K in contingency funds, above what I'm budgeting.
Perhaps a good approach would be to apply for finance with little/no credit card limit, then ramp up the credit card limits after you have your mortgage approved but before doing your renos/development, then when you're done, wind the limits down again when you want to apply for another mortgage.
We've found that if we tell the issuers to reduce the limit to $1K or whatever nominal amount because we're applying for a mortgage, when we ring them up again a few weeks or months later to say that we want the $20 or $30K back, they usually just put it straight back up.
It is worth doing, though, because even with enough servicability to have nearly $2M in mortgages and $80K on credit cards, when we got into cashflow problems last year, we couldn't even get $15K on a personal loan. Let me repeat: the real issue is that
when you need the money, it's almost impossible to get it. Make sure you've got as much spare credit as you can,
before you need it.