Credit cards, mortgages & offsets

[calgarychris]

Hi,

Just a quick one - Mrs Calgarychris and I have churned cards in the past however we've sat out for a year while searching for a new house, which was bought in September. Our current financial situation is solid - we have an admittedly large mortgage, with a correspondingly large offset account. Mrs CC recently applied for the ANZ Black card and was denied on the basis that she couldn't afford half the mortgage - which is true assuming you disregard the offset. My question to the brains trust is this - does it make a difference if the mortgage is paid down (i.e. prepaid) vs. having the cash in an offset? Or would I need to refinance to the lower amount (i.e. an LVR of 50% - something I don't really want to do).

Thanks peeps

 

[daft009]

Guess it would depend on earnings ultimately but yeah reducing the loan amount so you couldn't redraw it would help your case

 

[amaroo]

FWIW we've got a few million sitting in offset accounts - banks have always taken this into account when deciding our financial affairs. Just flick them onto your CA.

We've never churned credit cards.

 

[calgarychris]

Guess it would depend on earnings ultimately but yeah reducing the loan amount so you couldn't redraw it would help your case

Yeah, hoping to not do that - I'm just wondering if prepaying it (i.e. so it's available to redraw) would do the trick.

 

[amaroo]

Yeah, hoping to not do that - I'm just wondering if prepaying it (i.e. so it's available to redraw) would do the trick.

Don't do this unless you're prepared to have the bank grab a portion - could be small or the job lot.

 

[theblank]

My question to the brains trust is this - does it make a difference if the mortgage is paid down (i.e. prepaid) vs. having the cash in an offset? Or would I need to refinance to the lower amount (i.e. an LVR of 50% - something I don't really want to do).

Thanks peeps

the lender made the decision based on the loan repayment you declared on the credit card application. the loan balance/redraw/offsett has nothing to do with it. If you want to improve your credit card hunting opportunities, reduce your loan repayments. that is the only thing that will matter.

To be honest, just do a calculation of your loan repayment based on current balance, and record that figure. the other lender isnt going to check.