Pay stamp duty by credit card

[ProperTee]

I have a 5% deposit saved as well as enough for stamp duty and legals, etc. However, when my broker applied for a pre-approval, they declined a 95% LVR, but subsequently agreed to 90%. This leaves me short $20k on a $400k property. I can save about $5k by settlement time if I were to buy in the next couple of weeks, so I will then be short about $15k; roughly the value of the stamp duty. I'm wondering if it is possible to pay for the SD via a credit card purchase (not cash advance).

I'm open to any other ideas.

 

[Rolf Latham]

I have a 5% deposit saved as well as enough for stamp duty and legals, etc. However, when my broker applied for a pre-approval, they declined a 95% LVR, but subsequently agreed to 90%. This leaves me short $20k on a $400k property. I can save about $5k by settlement time if I were to buy in the next couple of weeks, so I will then be short about $15k; roughly the value of the stamp duty. I'm wondering if it is possible to pay for the SD via a credit card purchase (not cash advance).

I'm open to any other ideas.

maybe look at why your loan was declined to 95 % and address that issue with the lender OR another lender.

many times, many brokers put 95 % LVR to a lender that should nevere have been applied to.

What a lender's policy is on paper, and what their LMI will actually do is often quite different.

U obviously have OK serviceability, and have gen savings ( I assume) so a 95% may be possible, esp if its for owner occ.


ta
rolf

 

[Aaron_C]

If you have a friend who runs a shop you can swipe your card through their terminal as a purchase, and pay them the merchant fee as compensation and get the cash from the sale for your stamp duty.

 

[ProperTee]

maybe look at why your loan was declined to 95 % and address that issue with the lender OR another lender.

many times, many brokers put 95 % LVR to a lender that should nevere have been applied to.

What a lender's policy is on paper, and what their LMI will actually do is often quite different.

U obviously have OK serviceability, and have gen savings ( I assume) so a 95% may be possible, esp if its for owner occ.


ta
rolf

Thanks Rolf. Yes, serviceability is not an issue. I could go up to about 550k if I had the deposit and wanted to stretch the budget to the limit. This is for an owner occupied loan. I suspect the reason they won't lend 95% is that I don't have much in other assets , but as I have a high income, been in my current job 6 years and lived in my current place for 4 years, I get a few ticks, but not enough for 95%. I may have to go for a cheaper place for now just to get myself back in the market after some bad years (divorce, business failure).

 

[ProperTee]

If you have a friend who runs a shop you can swipe your card through their terminal as a purchase, and pay them the merchant fee as compensation and get the cash from the sale for your stamp duty.

Sounds creative, though a bit dodgy

Another idea I had was to pay as much as I can with my cc (bills, groceries, etc) and then I'd have the cash I would have otherwise used for the same purchases.

However, I wonder if the OSR accepts cc payments?

 

[cimbom]

Even if they do, the lender will want to see the amount as savings to approve it.

 

[wylie]

In Queensland, I pay my Land Tax by credit card. Maybe different states have different rules?

 

[Aaron_C]

Sounds creative, though a bit dodgy

Haha not at all...perfectly legit and you will get frequent flyer / reward points while at it!

 

[Rolf Latham]

Even if they do, the lender will want to see the amount as savings to approve it.

there are lenders that will remain nameless that are still doing things that do not protect the borrower.

Not as a lender, but allowing certain types of approvals to take place below the radar that can leave borrowers high and dry.

ta
rolf

 

[BayView]

there are lenders that will remain nameless that are still doing things that do not protect the borrower.

Not as a lender, but allowing certain types of approvals to take place below the radar that can leave borrowers high and dry.

ta
rolf

How do you mean "high and dry" Rolf?

Is it in terms of ability to service?

 

[Aaron_C]

How do you mean "high and dry" Rolf?

Is it in terms of ability to service?

I think what he means is giving approval for finance, allowing the borrower to go unconditional, and then pulling the plug at the last minute.

 

[Rolf Latham]

How do you mean "high and dry" Rolf?

Is it in terms of ability to service?

I will give you a specific example

Mr x goes to his bank for a pre approval to spend a mill on a block of 4 units

Banker says here you are, 60 % lend lo doc no problem Sir.

Mr x goes to auction and buys the units at 988 k. Puts down 98 800 deposit


Mr x comes to me to get the balance of the funds to complete...........

SE financials with 25 k nett, stamp duty available in cash.

One house valued at 310 with a 200 k mortgage

Mr x was very lucky to have relos that could stump up the cash.

Now the bank policy for that particular lender was NOT followed, and the bankie in question made a judgement call they should not have.

these are not isolated circumstances and I know personally of DOZENS of similar "policy waivers", fortunatelt most with no negative outcome.

ta
rolf

 

[Shahin_Afarin]

I have a 5% deposit saved as well as enough for stamp duty and legals, etc. However, when my broker applied for a pre-approval, they declined a 95% LVR, but subsequently agreed to 90%. This leaves me short $20k on a $400k property. I can save about $5k by settlement time if I were to buy in the next couple of weeks, so I will then be short about $15k; roughly the value of the stamp duty. I'm wondering if it is possible to pay for the SD via a credit card purchase (not cash advance).

I'm open to any other ideas.

I was in a similar situation personally about 3 years ago. A property was going very cheap and I was desperate to buy. I had the 5% genuine savings and took out a personal loan for the stamp duty. I paid it quick as our income was quite good. In the end we bought it for $700k and it was valued 950k by the end of the year. If the lender accepts that then perhaps you should consider that as an option.

 

[ProperTee]

I was in a similar situation personally about 3 years ago. A property was going very cheap and I was desperate to buy. I had the 5% genuine savings and took out a personal loan for the stamp duty. I paid it quick as our income was quite good. In the end we bought it for $700k and it was valued 950k by the end of the year. If the lender accepts that then perhaps you should consider that as an option.

Yes, in fact I put that very idea to my broker and he said it's a good idea and may get the deal over the line, so it is one option I'm considering.

 

[Aaron_C]

Yes, in fact I put that very idea to my broker and he said it's a good idea and may get the deal over the line, so it is one option I'm considering.

Hmm problem with doing that is taking out a personal loan for stamp duty (albeit a smallish one) really impacts on your servicing. This is particularly important for a 95% lend because the NSR requirements for these type of loans, particularly for investment, are very high compared to your normal 80-90% LVR. Be warned.

 

[ProperTee]

Hmm problem with doing that is taking out a personal loan for stamp duty (albeit a smallish one) really impacts on your servicing. This is particularly important for a 95% lend because the NSR requirements for these type of loans, particularly for investment, are very high compared to your normal 80-90% LVR. Be warned.

But it's now a 90% lend, not 95%. Serviceability would not be an issuea anyway. I could borow up to at least $550k based on serviceability criteria alone. However, I don't have enough deposit for that, plus I don't wish to commit to the point of not leaving enough for life's little pleasures. $380k plus small PL would be very comfortable for me to service.

 

[Rolf Latham]

But it's now a 90% lend, not 95%.

perhaps only because u accept that as such ?

ta

rolf

 

[ProperTee]

perhaps only because u accept that as such ?

ta

rolf

Are you suggesting that I push the issue with the lender or try another lender? My broker did say that if we can get the deal over the line he has been successful before in squeezing a bit more out of them. Is that what you mean?

 

[MikeR]

I have a 5% deposit saved as well as enough for stamp duty and legals, etc. However, when my broker applied for a pre-approval, they declined a 95% LVR, but subsequently agreed to 90%. This leaves me short $20k on a $400k property. I can save about $5k by settlement time if I were to buy in the next couple of weeks, so I will then be short about $15k; roughly the value of the stamp duty. I'm wondering if it is possible to pay for the SD via a credit card purchase (not cash advance).

I'm open to any other ideas.

Take one of your existing credit cards and pay it off so it has a zero balance (call it "CARD #1").

Then apply for a low rate balance transfer credit card ("CARD #2") with a $20k limit and as part of the application, do a $15k balance transfer to CARD #1 (NB: Most cards only let you balance transfer up to a certain % of the card limit).

CARD #1 will then have a credit balance of $15k which you can then withdraw to your bank account (should be no cost) and you can then use the cash to pay the stamp duty.

You then have a $15k debt on CARD #2, but the Balance Transfer interest rate will be way cheaper than a personal loan and cheaper than paying the Stamp Duty by credit card at your Purchases interest rate.

There are a range of low rate balance transfer deals out there at the moment, from 0% for 9months to 5.9% for 24 months and various in between. See here:-

http://www.creditcard.com.au/balance-transfers/duration/desc

Really just up to you to work out how quickly you could clear the debt on CARD #2. If you think it will take longer than the balance transfer rate period, look for a balance transfer card that reverts to the PURCHASE interest rate, not the CASH ADVANCE rate at the end of the balance transfer rate period.

Good luck.

 

[Jake D]

If you have a friend who runs a shop you can swipe your card through their terminal as a purchase, and pay them the merchant fee as compensation and get the cash from the sale for your stamp duty.

I once bought a car like this. Was very effective.