How To Use your CREDIT CARD to pay off your MORTGAGE FASTER in Australia | Property Investing 101
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Everyone asks about how they can pay down their mortgage faster in Australia with different tactics. In this video, I discuss my personal credit card strategy I use when buying Real Estate in Australia. The results will blow your mind!
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5 ways to pay down your mortgage FASTER 👉 ruclips.net/video/y--FqDbl0bM/видео.html
Credit cards aren’t for when you don’t have the money to buy something. They are just a method of payment. We have our offset variable loan with Reduced Homeloans at 2.37%. Our credit card is a platinum more rewards from BankWest. We pay for everything on credit card. It’s setup to pay the balance on card each month automatically from our offset. We haven’t paid a cent of interest on card in 5 years. We actually make $390/year from the credit card via points cash backs. We have $130000 in our offset account, so we could pay for thing with cash but paying via card actually makes money. We are paying for everyday things with the banks money but giving it back before the want interest.
But how to setup credit card with offset account ? How does offset account know what balance?
@@darshirathod1213 Your pay goes into the offset account so every possible dollar you have, is offsetting the interest. The way a responsibly used credit card helps is you pay every bill, purchase ect on your credit card so the offset account starts full. Have the credit card set to automatically pay what you owe before it is due to start charging interest. Basically use the banks money to pay for everything and give it back to them before they charge you interest.
@@darshirathod1213I pay things like mobile phone bills with this method. Even though the monthly payment will vary it isn't hard to calculate an average amount I would usually spend and set the automated transfer to that.
If you transfer too much in there it doesn't matter anyway as it usually all comes out in the wash later when you have a month that swings the other way.. just check it every so often to make sure it isn't drifting too much. Easy.
Excellent advice. Thank you and keep up with the work
Ravi your videos provides so much value, they are based on realistic and practical scenarios and examples. I like the authenticity in every single videos. I share your videos with my friends time to time. Keep us educating on useful contents. 👍❤️ Meets from Sydney.
Thank you much for this! I really appreciate the support and glad you enjoy the content with your friends. Means the world to me :) Let's grow together!
Love your work Ravi! This will help with my first property purchase. Keep it up!
Thank you so much Scott! Appreciate the support and glad you are making moves :)
Refreshing. Keen to check out more of your videos, love the no BS. Keep it up.
haha glad you enjoy the content :) Thank you
Solid Rav! Like your presentation thanks heaps!
Fantastic presentation skills Ravi! Your videos evoke positive emotions 👍
Thank you! Glad you enjoy the content!
Great advice Ravi! Not applicable for my case personally since I have advantage of salary packaging and that offsets the interest benefit. this video outlines simple concepts that regular people may find difficult to follow. You’re very succinct in your explanation. Thanks!
Use both is a double whammy
This makes a lot of sense thanks for making such informative content!
Glad it was helpful!
Great presentation! Ravi thank you for sharing your strategies
Thanks for watching Mark and glad you enjoyed the strategies :)
Great video Ravi, it’s a strategy I’ve personally used for years and it works. 👍
Amazing! Thank you for watching and I'm glad you are also using the strategy :)
Thanks Ravi, really good video, makes sense
I like how you said dump shit in this video. Straight and got to the point.
I agree with the concept. I'd like to see some calculations.
Just all the explanation I needed!! WOW
Glad you enjoyed it! Thank you
Makes sense, being doing this approach since by beginning days of investment. It’s all about minimising interest payments. Another enhancement which started recently is use interest free after pay. Could have taken advantage this after pay earlier but I just tried recently.
i love you brother, its insane.thank you for sharing you idea.
Actual tips starts at min 4
God bless you 😊
Thank you Ravi!
Stellar video Ravi, thanks!!
Thank you Marel! Appreciate it
Hi Ravi,
Whats the difference between this method and paying off credit card in full each month?
1) You have said, once you make a purchase(day 1) --->pay off this amount on day 54, assuming you purchase on day 3, do you still add 54 days to it?
2) My credit card considers day 1 of the billing cycle as the start of 55 day period, i.e if i purchase something on last day of billing cycle (day 30), i will only get 25 days interest free.
Great Revi appreciated
Thank you for making this video.
Thank you for watching this video :) Appreciate the support
Thank you for the video Ravi.
Is this correct that credit card payments are paid based on first expensed first paid basis?
Never knew that this was the case.
Cheers.
Hey Ravi. I watched this video and got off my backside and set up an offset mortgage and savings account. Thanks for that. Problem is I cant find any credit card that will work with transfering the CC ballance in and out of the mortgage. The class it as a cash advance and they all charge interest immediately. You say you use this strategy yourself? How? Did I miss something?
Hey, good video thanks! But how to pay the mortgage with credit card? Do you use a third part company? Fees associated still make it worth? Thanks again
Insightful. I've locked myself into a 3 year fixed loan. Just started paying for it. Any advice on starting to invest in property? Save capital then do it or just try remortgage the house after 2-3 years and use the equity to buy investments. (also great video by the way. It's good to see Australian content one can relate to)
Thank you for the support, appreciate the feedback :) I prefer using equity over my own cash when I can however this will be based on your strategy and what you intend to do long term. If you want to discuss further and create a roadmap then book a strategy session :)
What about if you have a fixed rate for a 2-3 year term that you are unable to link an offset account to what other strategies are there to pay off debt quicker?
does the savings on the daily interest of the loan make a significant difference that offsets the fees charged by the CC for what is a cash advance transaction to transfer money from CC into offset ?
hey watched your video it is informative. However, what if you were to have a line of credit even if there is no interest free period would it be more effective.
Love your videos Ravi👍
Thank you so much! Appreciate the support :)
How does this work when the bank has monthly statements? Wouldn't your credit card repayment get dinged on credit reports for not paying within the month of use?
I was under the impression that transferring the limit of a credit card would be considered as a cash advance and the interest free days would not be the same as a normal purchase. Notice not particular cards are mentioned or which financial institutions have a product that would be fit for this purpose. I think the advice to put money in offset it good so I'd say get an emergency fund and put it in your offset and add more to it each pay if you can. Credit cards are bondage just like any loan.
I believe you are correct and was hoping I would find more info but no one seems to be talking about this. At least usi g the credit card to Pur base everything and then paying off the closing balance each month is in effect very similar.
Thanks.. exactly i used this method so my mortgage paying down quickly.
But instead of putting money in offset acct i extra repaid with my salary as living with a credit card, as i need money using redraw for monthly pay a credit card bill. those principle are same thing. Thanks..
Thanks for your information which CC do I need for my online business (I have a credit debit card which isn't accepted) my business is new, and sales are still slow atm.
Excellent you boost my confidence Ravi🎉 and yes still I am waiting for my reply
The problem such as financial crisis when creditors closed cards and if you lose your job the money you accelerated that mortgage you can't get that money out of the house if you lose your job
This has blown my mind
Ravi, can you recommend come good credit cards for this use?
Hi Ravi so in this strategy should we pay monthly loan repayment from My salary ?
Is the higher interest rate of having a loan with an offset account vs a loan with a redraw only make this worthwhile. Redraw only loan with no offset account are at least 0.25% cheaper on average.
Rav. The bank will charge extra if I withdraw from my credit card account. This is not in your case?
Hi Ravi,
Amazing video, however i need a bit of clarification. Lets say i don't pay my CC until day 53, so i am paying less interest on my mortgage because the money that i was supposed to pay to my CC is still in my Offset a/c, however on Day 54 when i pay my CC, the amount is reduced from my Offset a/c, so the interest on my mortgage charged on Day 55, would balance out the interest benefit i gained.
Thats correct. Still a better option (depending on your risk management)
Hey Ravi. Best way to utilise AMEX Platinum card ? Im renting though. Hoping ill purchase a house in sydney one day in this ridiculous market
11:35 best advice everyone needs to hear 👍
Thank you!
yes great strategy, do you pay all bills with credit card ?
Ravi, have you taken into account a processing fee of 1.5% for credit cards?
Does this still work when there is a credit card surcharge or pay cash to avoid the surcharge instead?
Good video, I've been doing this for years now. Got me thinking, is it a good idea then to use the 15 months introductory 0% interest on purchases so you keep more money in the offset account for longer? Assuming you pay the minimum amount every month to avoid fees and then pay off the entire balance in lump sum by the end of the introductory period. Always thought of doing this but have never seen anyone demonstrate this before.
Yes. Ppl did that in the past .. several months ago the offers were real good, no transfer fees or annual fees .. if you've got spare cash.. can consider a term deposit loan.. your money will be used to secure the loan and the interest charged at simple interest, the bank will lend you back the money. You will be paying 2 loans.. a mortgage and term deposit loan. Since the term deposit loan is small it will be easier and faster to pay off as minimal interest charged. After you've paid off the term deposit loan the bank will release your money.. then you can restart the same process again. Cause we don't need to spend additional time to save up the money, we're ahead, we can apply repeat the process. During the time you use to save up the same amount again, the bank is charging compound interest. Using this method we are reducing the principal the bank has to charge interest off. The term deposit loan should increase your credit rating.
so to my understanding, provided one is responsible enough with a credit card, can maximize wealth building by arbitraging interest payments between a home loan and a 0% interest credit card provided one keeps track of the 0% interest period?
Long story short.
Use credit card to pay bills like grocery, gas, daily expenses, etc.. but instead of paying off the card right away use, transfer the payments to offset account first let it sit for 54days/a day before they charge interest.
So the interest on mortgage would be low.
Easy explanation, he did not mention to take out money from the card/cash advance, so for people who are asking that don’t do it. as it charges you daily, instead use it the credit card for your daily/fixed expenses i hope it make sense.
Came up this idea in my brain a while ago while researching for property. Thought it’s an evil idea 😂. However good to know I’m not the only one thinking of doing this.😂
Great strategy! However, I think it can be better if you give the final numbers of how much is actually saved in terms of interest charged and loan repayment by this strategy. Is it really that effective to let's say save around 10K for the 500K loan? Thanks for making this video.
Agreed.. 👍
Great strategy, but doesn’t a credit card lower your borrowing capacity?
Would you suggest using this strategy & then when the time comes to apply for another loan cancel the credit card first, get the max loan then reapply for credit card?
I have the same question..
How about Citi bank zero card which offers 36 months interest free rate? Can we use to pay 100k to pay the money and repay within 3 years?
Can you apply this to a car loan that is financed through a finance company not a bank?
Thank you for the video. For this strategy to have significant benefit wouldnt your monthly expenses have to be significant. Offsetting my monthly expenses of 2.5K, therefore reducing the interest on $2.5k wouldnt make a huge difference or let alone any. And dont loans with offset facilities have higher interest rates - im guessing the caveat being this only works if u have a loan with an existing offset facility. Yes it may be 55 days interest free assuming you make you first purchase on day 1 of the credit card cycle, and you will also need to ensure your salary aligns with your credit card cycle, but after that you have to make a payment monthly along with your mortgage payments. Where are the significant savings if any?
It's all relative. Small savings can be huge for some people and equally if you spend alot + have huge loan balances then it could work out in the long run.
Using this in combination of a few other tactics can then really make some impact :)
Please correct me if I’m wrong, but transferring money from credit card to an offset account counts as a cash advance and the interest free period does not apply.
Or are there credit cards out there that offer it?
that's not what he is suggesting - he's saying leave as much of your income etc in the offset account for as long as possible, until day 54, then pay down the credit card balance. During that period, you make all your purchases on your credit card and pay it as late as possible without incurring interest.
@@localleadagency2182 Thanks
They can do that in the USA
Great Video, What about if you have an offset that has a maximum amount of for instance $15,000 and you had that amount already in the account, this strategy wouldn't work would it ?
What bank in Australia, do you have that even offers an offset with a limit? More ridiculous, a limit of $15,00???
Hi Ravi,
Out of curiosity, would you only do this for weekly bills, general expenses (food, medicine, fuel etc) and utility bills only?, as while researching this topic I noticed they stipulate paying a mortgage debt with a credit card is considered a cash advance and would incur hefty fees, penalties and void your interest free period. I was hoping to exploit the credit card and offset account set up and wanted to pay all my weekly expenses including mortgage repayments with a credit card and then pay the balance off with cash each month obviously sticking to a strict budget still but it looks like that's a no go, what are your thoughts on this?
P.S love the video, very insightful 👍
You don't pay the mortgage with your credit card it comes out of the offset account. You buy everything else you can on the credit card and pay the monthly balance on the statement on the due date, thus leaving your pay in the offset for as long as possible saving you mortgage interest.
Offset accounts are usually higher interest rate
Nice video Ravi ! Just one thing to keep in mind its not 55 days its UPTO 55 days that means some purchases may only have 25 to pay back.
Correct
Yes, you are correct! I should've mentioned that :) As long as people understand the principle, it should help even with 25 days. Good pick up though, thank you!
How do you know which purchases are at which day amount?
Banks do not give customers the interest-free period on cash transfers.
Wow thank you
Thank you for watching :) Glad you took some value from the video
Mathematically works but doesnt seem to be worth the risk of giving yourself alot of credit card debt. If you have the self control to make this system work you could also use thay self control to pay down your mortgage faster directly. And avoiding all of that extra risk.
what type of credit cards allow this strategy as i believe credit cards will not allow transfer of money to another account which will be considered as Cash advance and charges more interest.. Am i missing anything here ?
I'm not suggesting a cash transfer - I am suggesting to perhaps use the credit card to pay for expenses which are within your limit and then pay off the card in full with your own cash that sits in your bank account. Hope that makes sense :)
Love your videos. Very good simple insights. Question though - how would you use credit card to pay a home loan. Wouldn't it be treated as a cash borrow transaction that incurs additional cost?
You don't actually use your credit card to pay the loan off. You park the cash that you get as a salary, rental income etc in the offset. Use the credit card to make daily purchases (making sure that you dont touch the cash in offset for 55 days). Once the 55 days is up you pay off your credit card using the money that was received in the offset (the idea is to keep as much money as possible for as long as possible in the offset as the interest on home loan is calculated daily and that on the credit card is only calculated once the 55 day period is finished). You keep doing this every month. The whole crux of the video is that if you can use your credit card wisely then you can use it to your advantage.
The amount of interest you will save of 5000$ credit card in a year is equivalent to credit card yearly fees
Unless you grab a credit card that has no fees ;)
Hi Ravi,
Does this apply to the Amex platinum charge cards?
TIA!
😁😁😁
Does Amex platinum charges cash advance intrest ?
Hold on Ravi, my credit card is with CBA and the card restricts me from using debt to pay another debt.
Hey John, I use the credit card to pay for expenses that I would normally pay for in cash. This way the cash stays in my offset account for longer and that means less interest to pay long term. Does that make sense?
@@PersonalFinancewithRaviSharma fantastic idea! Definitely going to think about going offset when I re do my loan!! So smart! 🙏
@@PersonalFinancewithRaviSharma For sure Ravi, of course, I pay for long service levies, civil engineers, structural, hydro, D.A lodgements, all done on the card, but for mortgages, there's no bpay or biller code.
@@jasonator89 Awesome! No problems at all :)
Hi. Does using credit card to pay into the offset account not count as a cash advance?
Try it and see if you get charged.. then U have the answer
While this is useful information to me it doesn’t make a difference. When I put money into an offset or a redraw to me that money is to lay down the loan quicker and that’s it. It’s extra cash I don’t need which is why I’ve put it into the loan. I have separate accounts for both a holiday fund and a new car that I pay into weekly which is why I don’t need to pull money out of the loan.
Could you max out your credit card and put it all in your offset account and then pay it off on day 54? Since the money will just be sitting in your offset account?
I don't think you can transfer "funds" from your credit card. You would only be able to use it to purchase certain things.
I think in the US it works differently and is why they say you can use your credit card for a deposit on a home. Wild tings!
Nope. Cash advances from a CC incur interest straight away. This is why the US method doesn't work here.
As far as i know, Transferring money from credit card to offset account has no interest-free period and you need to pay interest everyday. Can you please explain that?
Thanks for watching and commenting :) You can't transfer money from your credit card, you can use it to purchase things you would normally have with your cash which sits in your offset account.
Examples: insurance bills or monthly internet bills, food shopping etc.
Which credit cards allow this? Wouldn’t this be considered a cash advance and you’ll have to pay daily interest (and usually higher rate, and without the interest free period) on those.
No, this works, I am using my credit card to pay less interest with St George
A calculator showing how much more could be saved over a 12 month period or life of loan would of been handy.
As pointed out by other people, math works out but the risk you take on for the reward is not for everyone.
Let’s consider a $500,000 loan with a 3.5% annual interest rate. Lets consider a period of 1 year.
Without this strategy you’re paying $17,500 interest.
With this strategy, it’s natural that the level of your credit card debt fluctuates over time. To keep things simple, we can assume a rolling 54 day average of $3000 debt. This means that you’ll be in $3,000 credit card debt everyday throughout the year, which you’ll pay off on day 55 to avoid interest. By using this strategy, you’ll always have an extra $3,000 in your offset account throughout the year to reduce the level of interest you’ll be charged on your home loan.
Effectively, you’ll be paying interest equal to 3.5% * (500,000 - 3,000) = $17,395
In summary, you’re saving $105 annually to consistently hold $3,000 of credit card debt throughout the year.
Props to Ravi for making this vid, but think whether this strategy is right for you before you jump onto it.
This is a great breakdown! Thank you JL! 100% agreed especially when people take out a higher limit out on their credit cards.
Credit cards = debt.
The easiest way to pay off your mortgage quickly is to make a budget, be an adult and make some sacrifices, and pay more on your mortgage than the minimum.
So per your example you'll just have an average of about $3k more in the offset throughout the int free period? Not a terrible idea I guess, don't think it's worth someone's time
Cool hack 👌
So this only really works if you have an offset account? Which for a 100% offset you need to have a variable home loan? Which is 1.5% higher than a fixed rate. Kind of cancels it out i think
I loved the video and also subscribed. I like your fee videos I have seen. I just feel like this one dosnt really work on a low fixed rate??
Thanks for watching Shane. Some banks offer 100% offset accounts with a fixed rate ;)
Thanks for the reply. I have 3 loans with CBA, the don't offer 100% offset with fixed. I think they offer a 15% offset?
Which banks offer the 100%? I'd love to look at changing and using this strategy.
Thanks
Now that you’ve shouted out such scheme… banks have stopped issuing such cards 😂😂😂
2:18 "don't buy dumb shit you can't afford"
Sold
Quickly? Might save $300pa
Why did I not find you sooner 😄
Let's just thank the RUclips algo in helping you find this community now :) Welcome!
The course link doesn't work.
Try this one :)
www.searchpropertyau.com.au/online-course/
Be careful your credit rating will decline if ur credit card is full
advice starts at 3:59 .....
Hey Ravi, do you recommend paying your mortgage monthly with this strategy or paying it weekly/fortnightly and just all other expenses at the 54 day mark?
Whatever suits your overall budget. When someone pays off their mortgage more frequently - the interest calculated daily is less however, could cause cashflow issues if one gets paid monthly and makes repayments weekly
How dare you try and tell me not to buy dumb shit I can’t afford! 🤣
Lol!
E S !
I really don't get which credit card gives you interest free period to cash advance.. these are for retail payments only.