It’s time we talked about your credit card…..
Back in the good old days, banks used to almost throw high credit card limits at you. We’ve seen customers with multiple credit cards and combined credit card limits of over $100,000 over the years.
For some, having a credit card was seen as any one of a status symbol, an emergency reserve or handy to have.
For others they became a debt trap.
Today, they are a hindrance, compromising your ability to get a home loan.
Here’s the thing – for every $1,000 limit your credit card has, the banks will generally assume you need to make a repayment of $38 each month to the card…..
Now if you look at what happens when they assess your home loan application – that $1,000 credit card reduces your borrowing power by between $6,500 and $7,000.
So - a $10,000 credit card drops your borrowing power by between $65-70,000! Got a higher credit card limit? Keep multiplying the factor.
So if you have a credit card for emergencies or a status symbol and you’re thinking about a home loan – now is the time to get rid of it – unless you want to settle for the next best house.
If you have a credit card that just won’t go away – you can still get rid of it. Refinance the debt to a lower cost personal loan, get rid of the credit card and pay the thing off.
If you need help crushing your credit card debt, talk to us today about how you can go about it.
We are based on the beautiful Queensland coast, between the Sunshine Coast & Brisbane and we offer a complimentary home loan broking service.
Make an appointment today for an obligation-free chat, to talk about what you need and how we can help.
*This article is general information only and does not constitute financial advice. Your personal circumstances will need to be assessed before any product or proposal is recommended. Mark Hind is an Authorised Credit Representative (ACR 519951) of Outsource Finance Pty Ltd, Australian Credit Licence 384324.
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