Advice on Balance Transfers , credit cards and Debt

[millykitty]

I am currently trying to sort out my partners and my debt. Unfortunately I am in charge of finances, since he wouldn't have a clue what to do. To be honest, I barely do either :shock: I'm sorry if this is in the wrong forum. But I've been trying to research our situation all morning and just not sure what to do

This is our current situation -
420,000 mortgage, the house is worth approx 550,000 when we bought it 1.5 yrs back, although I am guessing it may have gone down a bit with the current economic situation. We are on a fixed interest rate of 7 something %, but this fixed interest rate doesn't finish for another 1.5 yrs. So don't think we can refinance at this point since the interest rates have dropped so much we would be looking at high fees I think?

Credit Cards -
I have 2. A Commbank Visa credit card maxed out to $3000. 17.99% interest. A Coles Source Myer Card $4000 limit and $3000 owing. I think it's around 20% interest
My partner has 1 credit card with a $4000 limit, and its maxed out.
He also has a $10,000 personal loan

I am self employed, and earn only approx $21000 pa (net)
My partner earns around $55000 pa (net)

I am thinking we could get a new credit card and do a balance transfer with a card that has a low interest for the life of the loan. However, I guess they wont really offer us much of a limit? Ideally we would like to put at least his 14000 on a credit card with low interest

I have a problem applying for a new credit card. A good credit record but I have only been self employed for 1 yr, as I was at Uni prior to this and got the other CCs when I had a casual job. They have told me I need to be self employed for 2yrs

Partner has/had bad credit. It's due to expire in 5 days. However last year he had an accident and I applied for a lot of credit cards - at least 8 (all rejected b/c of his bad credit) to help pay off the bills. So maybe his credit rating wont be that good since he has applied for so many credit cards and they were all rejected?

Sorry this is all so long, and sorry if its not in the right forum. I'm just stressed and looking for any advice I can get

 

[Dave Noble]

It doesn't sound like you are in too bad a position given the equity in the property

It sounds like you have $20,000 unsecured debt with an equity in the property well exceeding this

Although you might not be able to refinance the mortgage, you may be able to get a secured loan which tend to have low interest rates and can be repaid over several years

For this to work, you will have to be prepared to live within means from then on and not just start using the credit cards again.

Dave

 

[millykitty]

Thanks Dave for your reply. You are right, a personal loan may be the way to go. Would a secured loan be against the property?
I've had a quick look at loans.

Citibank has a current offer of 7.9% "personal credit" to which we are able to transfer personal loans and credit cards. Would this be a good option?

I am guessing though it would be hard for my partner to include my balance transfers since they are not in his name...

Also, I don't think Citibank would be too keen to offer us 20,000.
As they rejected an application 5 months back. I guess they would have a record of that failed application and why it failed (partners bad credit I assume)

Anyway, will keep looking for more personal loans with low interest rates

Thanks !

 

[Dave Noble]

Thanks Dave for your reply. You are right, a personal loan may be the way to go. Would a secured loan be against the property?
I've had a quick look at loans.

Yes; secured loans are secured against the property. They tend to be easier to be approved for since the debt is guaranteed against the property

The important factor to remember is that your home may be at risk if you fail to keep up repayments on a loan secured to it

If really serious about getting rid of the debt, I would suggest getting a loan and then dumping the cards rather than just trying to take out another credit card

Given that you seem to have a lot of equity, I think that this would be your easiest bet at reconciling debt into a manageable form. I would suggest getting rid of credit cards until it is repaid and live within income. For ease of making purchases , a visa or mastercard debit card on your bank account will give the benefits of avoiding carrying cash but without the build up of debt

Dave

 

[medhead]

A line of credit type account mightbe the best option. This is secured against the house mortgage. Similiar to the citibank personal credit account. The easiest way might be to check the products of you current home lender. e.g. NAB offer a flexiplus mortgage at around 7%. Other banks might have similiar. The trick would be to transfer the cards and personal loan to this account and then cut up the cards.

 

[JohnK]

A Commbank Visa credit card maxed out to $3000. 17.99% interest.

Do you hae the CBA low rate Visa card? If not, why not switch to the CBA low rate visa and ask for a credit limit increase?

Firstly if most of your debt on the CBA Visa is on purchases then it reduces the interest rate down to ~12%. Secondly you are entitled to 6 balance transfers every year at 5.99% for 5 months. So use this to pay off some of the balances on the other credit cards and when the 5 months is up use the balance transfer feature again by transferring some money from the other credit cards back into CBA Visa to clear the balance on the Visa and then balance transfer the amount from the other credit back on to the CBA Visa for another 5 months. Not a perfect solution but it helps reduce the interest to be paid in the short term and you do not have to apply for any new credit cards or loans....

 

[millykitty]

Thanks everyone for your replies.
I tried for the citibank personal loan, unfortunately we were rejected.
I have since taken JohnK's advice (thankyou!) and now have a CBA low rate Visa card which we increased the credit. We are now going to transfer our debt across to this for the meantime. We are now looking into a line of credit as mentioned by medhead

Thanks again