Suggestions in QLD for newby investor?

Hi Beanie Girl.
Yes, I see where you are going with the credit card transfers and I am not going to get cross about it.

However, as far as I know and I'm pretty anal about banking and debt, on a 0% balance transfer, you only get the interest free bit for the amount one transfers, not the stuff one draws. Those cash advances are charged up at very high interest from day one. So I think this plan would only be possible if our friend has a massive credit card debt to transfer in the first place.

I know that a few seminar circuit speakers have used CCs to boost the "savings at bank" amount, but then it also reduces serviceability.
 
Beanie Girl, i had similar thought while i was planning for my first IP. Infact i know few ppl who does thus......i decided against it cause it will have unnecessary hits against your credit file....which i don't think is worth it.....my 2 cents
 
Rookie1 said:
I have many questions, but will leave it there for now... I would really appreciate any thoughts, advice, or words of wisdom :)
Click to expand...

Rookie1,

First off, welcome to Somersoft.

What and where to purchase is dependent upon your chosen investment strategy.

You see property is merely 'the vehicle'. Your strategy is how you intend driving that vehicle.

Unfortunately the mistake I see newbies and sometimes not so newbies is that they are property focused instead of strategy focused which is like putting the cart before the horse.

Property investing is not about 'the property' rather about 'the strategy' and the way you intend to use 'the vehicle' to get to where you are wanting to go. No good purchasing a small shopping car if you intend driving interstate on a family holiday.

Which strategy/s is best for you is determined by where you are wanting to go, the time frame you want to get there in and how hands on along the way you want to be - all based around your personal risk profile.

I hope this provides some food for thought.

What is your chosen investment strategy?
 
Beanie Girl, Talk about thinking outside the box! :) amazing! this kind of strategy sounds complicated, and perhaps risky - if I were not a good saver, but I am very disciplined. My question to you is, would the bank not see what I have done to raise this money and frown upon my loan app?
I am not so up to date with the balance transfer stuff. I realise I could swap a ccard balance to another bank for an interest free period, but could it be possible to do this 2 - 3 times on my wage?
I am a bit of a ccard rookie as well lol, only ever had one at a time - and $4000 has been the max limit I have ever asked for. So maybe this is a silly question :)
Thanks Beanie Girl!
 
Oops, just realised more posts after Beanie Girl's idea :)

Thanks for the input. I do realise a strategy like this (the ccard stuff) could get a bit messy - especially for a newbie.

Rixter - Thankyou for your words of wisdom :) you are right - no more focusing on just the property - I guess that is the exciting part and it's easy to get carried away!

Just from reading different posts within this forum I feel I have learnt a lot already. Many different strategies and points of view.
I have thought for some time that my strategy was going to be all about positive cashflow property -(this could be due to me watching too many Nathan Birch youtube videos!) or Steve McKnight books!

I had hoped that even with an unfavourable financial situation (single 2x kids etc) I could use one property to leverage myself over time to the next.Seeing as they should be almost paying for themselves.

I feel that with a limited amount of cashflow I would feel safer not dipping into my own wages too much to begin with.(Scared of negative gearing!)

It is difficult to work out whether to buy my own home (and rent it out later) or invest 1st.
My parents would definately say buy your own home - but I think this way of thinking could be out dated? Get you stuck?

Perhaps I would be better off purchasing a PPOR and taking advantage of DHOAS. This would work out at approx $256/month towards a $250,000 loan. Am I correct that no stamp duty is payable on owner occupier property purchases?

Thanks again in advance
 
Rookie1 said:
Beanie Girl, Talk about thinking outside the box! :) amazing! this kind of strategy sounds complicated, and perhaps risky - if I were not a good saver, but I am very disciplined. My question to you is, would the bank not see what I have done to raise this money and frown upon my loan app?
I am not so up to date with the balance transfer stuff. I realise I could swap a ccard balance to another bank for an interest free period, but could it be possible to do this 2 - 3 times on my wage?
I am a bit of a ccard rookie as well lol, only ever had one at a time - and $4000 has been the max limit I have ever asked for. So maybe this is a silly question :)
Thanks Beanie Girl!
Click to expand...

Hiya Rookie,

My suggestion about the credit cards was simply to get you have to have a bigger deposit sooner rather than later should you see your dream property IP, as you said you were moving into a granny flat at your parents property.

But Rixter is right, have you thought through your strategy of investing and why you want to invest? What would you like to get out of investing?

Would you like a PPOR first or an IP first? Why?

Some on Somersoft will say, 'Buy the IP, buy as many IPs as you can' (tip of the hat of respect to alexlee here :))

But if your goal is security for you and your 2 littlies, maybe working towards a PPOR is right for you at this time of your life. There is no capital gains tax to be paid when you sell a PPOR.

On the other hand, if your parents are going to leave their home to you, then that may eventually be your PPOR and you may be looking for an IP now whilst still in stable, paid permanent work - before you no longer qualify or is out of your reach.

Will you be applying for a loan from the same bank that you do your banking and savings with?

I bought 2 IPs at the end of last year, from a different lender than my bank. A 90% loan with LMI. I went with a non-bank lender because of the special IO rates they were having, 4.64% on one IP and I think 4.52% on the other.

On the first occasion, they asked for 2 months of payg slip and just a bank statement showing that I had enough money for the 10% deposit.

For the second IP, besides the 2 months payg slip, they wanted 2 months bank statement.

I am not sure if applying for 2 credit card balance transfers will have any effect on your credit file or any home loan application. I am trying to check this out but I hope other somersofters who have knowledge can answer this question. I think, but I am not sure, that a credit check stays on your file for 1-2 months then disappears from view of credit checking agencies.

I know it is possible to get 2-3 balance transfers done to your credit card without having to cancel your credit card.

I have applied for and gotten 5 balance transfers before in the space of 1-2 week period. I requested all the monies to be transferred to the same Visa credit card (had very little owing on it), then transferred each tranche of money as it came through on the Visa credit card, into the best interest bearing bank account. I still have the same Visa credit card today :)

All the balance transfers were done smoothly and I enjoyed the increased interest on my bank account for the duration of the 0% interest free period of the 5 credit cards. I kept all the credit cards aside, paid the minimum sum each month on the due date then cancelled each card when the interest free period came to an end.

Hope sharing my experience helps :)
 
Thanks Beanie Girl, I am going to look into this. Thanks for the real life example too. Makes more sense to me now :)
Will do some thinking and research - then post an update,

Thanks again!
 
Hi Beanie girl,

Just a couple of questions about the cc balance transfers,

I have been reading some threads on whirlpool about this - how to do it etc. Many conflicting opinions - but like yourself people have done it! so I am curious,

It is what you do with your existing cc balance that I do not understand.

For example:
If my visa has a $4000 limit, and $0 owing, do I approach one of these 0% interest cards/banks and tell them I want to balance transfer $10,000 to this card? (and obviously now owe them $10,000)

Must they have a cheque to self option? is that what you used?

Then I withdraw the money as the cc (my $4000 visa cc) would be + $10,000 - which makes it not a cash advance, but extra money in my cc account - above my $4000 limit.

Phew! :)

This is a post from whirlpool, would you say it is this easy? (maybe not 19k for me!)

28 Degrees – 0 Balance
CitiBank – 0 Balance. Offer of transfer of debt or cheque to self at 0% interest for x months.

Sooners: Hello Citibank, please transfer $19,000 to 28 degrees
CitiBank: Ok.
28degrees: Hmm, looked like Sooners has cashed in 19k to his account. we know owe him 19k.

Sooners goes to bank over next few days to withdraw $19,000 from 28 degees card. Debt is with citibank at 0% for x months

Thanks Beanie Girl, a little confused but very interested to understand how it works :)
 
Rookie1 said:
Hi Beanie girl,

For example:
If my visa has a $4000 limit, and $0 owing, do I approach one of these 0% interest cards/banks and tell them I want to balance transfer $10,000 to this card? (and obviously now owe them $10,000)

Must they have a cheque to self option? is that what you used?

Then I withdraw the money as the cc (my $4000 visa cc) would be + $10,000 - which makes it not a cash advance, but extra money in my cc account - above my $4000 limit.

Phew! :)

This is a post from whirlpool, would you say it is this easy? (maybe not 19k for me!)
Click to expand...

Hi Rookie,

Yes, it was that easy :)
If your visa was 0 balance and they transferred 10K in it. Your visa would have 10K extra money sitting on it. The balance transfer is not cash advance money.
When you have 10K extra sitting on your visa and you withdraw it, it is not cash advance money either.

If you owed $1000 on your visa and they transferred 10k on it, then your visa would have 9K left. The balance transfer of 10K effectively paid off your $1000 owing, then you have a sweet 9K to withdraw from your visa

I had a work colleague who used to work at one the major 4 banks and his job was in balance transfers. He explained to us that his job was to give as many balance transfers as he could as long as the applicant met all the criteria. The applicant does not need to give a reason as to why they needed the balance transfer and did not need to tell him what exactly was owing on their visa/master/amex card. They just needed to apply for it, state the amount they wanted for balance transfer, then just give the visa number and bank they wished the balance transfer to be effected on.

Hope this helps :)
 
Hi Rookie1

I am also lookinmg in the redbank plains area, research the 'active soil' in the area

NOTE: I pulled out of a house on cedar rd due to "floor not being level"

John.
 

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Will balance transfers affect credit score

Hi Rookie1, I found this answer on creditcard.com.au under their Balance transfer credit card section.

Rodney
January 12th, 2014 at 10:16am
Hi, I have 2 questions please... If my credit card limit is @ $7000 and i transfer the balance to another company and get a higher limit, how will that affect my credit score?? And 2, would it not be better to just get a personal loan to pay it out in full??? Thanks.

user pic

Roland

January 14th, 2014 at 9:28am
Hi Rodney, generally speaking, a higher credit limit will not affect your credit score very much as long as you make your repayments on time and show that you are responsible with managing your credit card debt. You may refer to our article: http://www.creditcard.com.au/credit-card-debt-are-personal-loans-the-answer/ on how personal loans may or may not help with paying out credit card debt. I hope this helps, if not, please do not hesitate to leave another comment with more questions.
 
Angel said:
But isn't your borrowing capacity severely limited by having all the credit cards?
Click to expand...

Hi Angel, yeah, I too thought having more credit cards would limit borrowing capacity. Between DH and myself, we have, I think, 6 credit cards that add up to nearly 70K of credit. But that didn't stop us from getting 2 IP loans last year. The number of credit cards we had was never mentioned as an issue.
We mainly use 1 or 2 cards and pay off the balance every month.

I think applications for credit card make one small part of your credit file/report but I think there's other things like do you make monthly payments ontime, how long you have been with an employer, how long you have been at your residential address, have you ever left a gas/mobile/electricity bill unpaid, have you ever been in default with your credit card provider beyond 60 days and they had to file a credit report against you etc...

I'm researching this very subject up atm, credit file and credit scores, will get back to you what I find.

Check this link out! It gives you an opportunity to calculate your credit score!
FREE!

https://www.checkmyfile.com.au/score.asp

"Find out your credit score FREE. No 'search footprint' is left on your credit reports - this is totally anonymous and is designed to help you to understand how credit scoring works.

Simply answer the questions and we'll tell you your application credit score instantly - on a scale of 0 to 1000 - where the higher the score, the better it is. The average score is 750.

We'll also tell you what your credit rating is on a range of one to five stars".
 
s0805 said:
Beanie Girl, i had similar thought while i was planning for my first IP. Infact i know few ppl who does thus......i decided against it cause it will have unnecessary hits against your credit file....which i don't think is worth it.....my 2 cents
Click to expand...

Hi s0805, haven't forgotten about your concern too, 'does applying for credit card cause unnecessary hits against credit file'. From my research so far on credit files and credit scores, potential lenders can see that you applied for credit cards but they are probably more concerned with whether you manage the debt well, pay minimum sums on time, no arrears on the credit card accounts as well as other things on the credit file. Will be researching more on credit file and score and get back to you.
 
Hi Rookie1,

On rare occasions I hang out on this forum but not that much.
I post even less but decided tonight I would as I can offer some advice.

I don't believe obtaining credit card transfers / additional credit card debt is the best strategy for the OP in this situation.
That being said credit needs to be given to Beanie Girl for at least coming up with options and wanting to help.

The level of borrowing the OP needs will require what is called "Lenders Mortgage Insurance". Commonly referred to as LMI.
This is insurance for the bank where if you can't pay your loan and the bank has to sell up, any loss to the bank will be covered by their insurer.

Before a bank approves your loan application they will seek approval from LMI.
There are two main mortgage insurers in this country. A number of banks self-insure however they usually stop at 90%LVR. Anything higher than this will require approval from either one of the two main insurers.

The checkmyfile link would relate to information that is held in your credit report held by Veda Advantage. Whilst it is always a good idea to obtain your own report, (If you want to know I would recommend you go to veda.com.au It does cost but is more comprehensive than the free ones), just be aware that banks and MI use their own credit scoring models that are more involved that the credit score you can obtain online. Why? - they are built on a number of factors relevant to their business model which includes where they have had previous losses.
I have seen people with very good credit scores from Veda be declined by mortgage insurers because it didn't pass their credit score model - once again, they look at different things.
Unfortunately it's not possible to learn the inner workings of these credit score models in detail as not even their staff know all the ins and outs.
... getting somewhat off track here.....

Should you obtain a few $10k credit card transfers (let's assume 3) to boost your deposit by $30k and buy a better property please be aware that you will need to include this credit card debt in servicing.
Based on Credit Cards of $30,000 the bank would factor in a monthly repayment figure of $900 per mth.
A $195,000 home loan at 5.5% (I/O) would have a monthly repayment of approx. $894 per mth.

In my experience nothing kills home loan applications faster than credit card debt. That and bankruptcy.

Lastly, just want to clarify a few items Beanie Girl raised, not trying to nitpick, so you have a better understanding of things.

1. Every time you apply for finance (this also includes credit balance transfers to a new credit card) the company you applied with will leave a hit on your credit report. Underwriters for the bank / LMI will see this and will question the outcome of that application. Having a lot of enquiries in a short space of time (approved or not) DOES affect your credit score and also affects your home loan application (not in a good way).
They will get concerned if there are a number of credit enquiries in a short space of time. This always looks like someone was desperate for credit and historically, they don't make good borrowers for the bank.

2. "Hits" to your credit file will stay on there for a number of years. Banks / MI usually don't look further back than 1 - 2 years. Credit defaults last for 5 years before dropping off. Bankruptcy lasts for 7 years before dropping off.

Just thought you should have some more info at your disposal before making a decision on whether you want to load yourself up on credit card debt or not.

If you are not planning on borrowing for another 6 months or so my advice would be to work out what you need to borrow and how much your repayment will be. Once you know that then start saving that amount every fortnight / month. Showing the bank you have an established savings history at the same level your loan repayments will be will result in a stronger application than fronting up with a large deposit obtained quickly via credit card debt.
 
FANTABULOUS, aerobar! Thank you so much for excellent info! MWAH! :p
Exactly the accurate financial info needed for Rookie1's consideration.
I was deeply worried about the effect of 2-3 balance transfers on Rookie1's credit file/credit score and home loan application but I couldn't find any information on potential consequences. It's like a secretive black box....a cabal in place...
Apologies, Rookie for suggesting the balance transfers in the first place...it may have been rash...:eek:
 
aerobar said:
Should you obtain a few $10k credit card transfers (let's assume 3) to boost your deposit by $30k and buy a better property please be aware that you will need to include this credit card debt in servicing.
Based on Credit Cards of $30,000 the bank would factor in a monthly repayment figure of $900 per mth.

1. Every time you apply for finance (this also includes credit balance transfers to a new credit card) the company you applied with will leave a hit on your credit report. Underwriters for the bank / LMI will see this and will question the outcome of that application.
Click to expand...

Aerobar, have an idea. Can someone (not Rookie1 but a friend or family member) apply for a 10K credit card transfer now and then one more 10K transfer in 4 months time? I know Lenders will see that there's been a hit to the credit file but can they see how much credit card transfer was borrowed?

This friend or family member may already have a PPOR/IP and does not have any need to apply for more loans in the next 12-24 months.

The friend or family member can put this 20k in Rookie1's other bank account and Rookie1 can say this was a gift from her parents or something to help out with the home loan.

Rookie1 has already saved $18,000. No mean feat considering she has 2 little ones. She also saves approx $650 a fortnight and can put this to her savings so the bank can see her savings habit. Rookie said in a previous msg that she will be able to save $7200 in 4 months, plus there's a tax return of $5000 coming to her in 4 months time too.

Rookie1 is only in this position because her ex-partner garnished approx 20K in the separation settlement. Otherwise, she would have this 20K in her bank right now.
 
Last edited:
Hello again

Wow you all are so very helpful! thankyou.

I did not commit to the balance transfer idea, only for fear of the kind of thing aerobar said. I don't know enough about lending/loan apps and credit to be sure that each $10,000 cc would not then show up as cc debt in my loan app. I had not considered the LMI checks though, so thankyou

Ok - I must admit, I was just a little tempted - as I think you should earn $500/pa interest on $10,000 in a high interest saver?

Beanie girl, that is a great idea, I may ask my ex to do this for me as a thankyou for taking such great care of his children :) but in all seriousness - I think he would do this for me once, as long as I inform him of all of the info/hits to his file etc. He knows I am good with money - I saved him $18,000 :) lol.

I have now opened a NAB reward saver at 4.06% for my money. So I have made progress just from reading your info, as my money was in a crappy 3% account all this time. Didn't even think to check for something better until now.

If all else fails, I could show off my saving skills to my parents down the track and beg them to go guarantor for me, or stay longer in the FT Army if all else fails...

Thanks again, love learning about all this stuff :D
 
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