Mortgage with offset

Ok so I have never had a mortgage with an offset but with a refinance we now do.

I think I know the answer to this but wanted others thoughts.

So we refinanced to do some renovations too. So we have the mortgage and the offset with about $70k in it and our pays are going in there once our workplaces sort that out. Renovations are going to take some time to sort out so the money will sit there for a while.

That is now the only debt we have. However I am aware that normally an offset would work best with a CC. Which we stupidly didn't organise when we did the mortgage and now the company we have gone with has a hold on new CC applications due to COVID.

So Im going to either have to not use the offset as intended and not get the most benefit out of it or apply for a CC from another service.

Now comes my dilemma - on our credit files the old mortgage is still listed as active (I know it will get sorted eventually) and so are the 2 old CCs which have also been closed.

Do I wait until those are listed as closed on our credit file or will it not really matter with the money sitting in the offset account?

What do you mean the company you've gone with? It's not a bank?

I'd have thought if they're lending you a shitload anyway they might as well chuck in a credit card? Like it's bound to be for less than $70k.

Not an expert but I'd imagine if you have proof they have been closed, the cc company will probably consider that good enough.

Whether the CC is with the same bank as the mortgage or not is neither here nor there. Just choose the one with best value. Personally when I looked at the savings of a cc it was bugger all, especially with mortgage rates so low.

What do you mean the company you've gone with? It's not a bank?

I'd have thought if they're lending you a shitload anyway they might as well chuck in a credit card? Like it's bound to be for less than $70k.

Sorry yes a bank. It would probably have been fine if it was part of the original application but I didnt realise until too late that it wasnt. They are not currently approving new CCs

Not an expert but I'd imagine if you have proof they have been closed, the cc company will probably consider that good enough.

Whether the CC is with the same bank as the mortgage or not is neither here nor there. Just choose the one with best value. Personally when I looked at the savings of a cc it was bugger all, especially with mortgage rates so low.

Agree. I'm old enough to go back through numerous rules, but when it eventually became possible to have a mortgage with redraw, AND have wages paid into the mortgage account, AND put everything during the month on credit card and pay once a month, it saved us a fortune, but interest rates would still have been around 10% at the time - sounded good to us of course, but a long way from today's rates.

I don’t think a credit card would make that much difference. Whereas $70,000 in savings would. Having an offset with that amount would be better than not having one. If you can’t get a credit card with whoever your loan is with, you will just have to go somewhere else.

Isn’t the principle the same - pay for everything on your credit card and pay it all off on the due date to keep money in your savings account to keep the loan amount down? You can still do this even though you have a credit card elsewhere.

I don’t think a credit card would make that much difference. Whereas $70,000 in savings would. Having an offset with that amount would be better than not having one. If you can’t get a credit card with whoever your loan is with, you will just have to go somewhere else.

Isn’t the principle the same - pay for everything on your credit card and pay it all off on the due date to keep money in your savings account to keep the loan amount down? You can still do this even though you have a credit card elsewhere.

The advantage of having it with the same bank, is that you can confidently transfer the money across in a very timely way.

I have a 28 degrees Latitude card that I don't use as much now, but paying by BPay it can take days to appear on the account. If I'm unsure I have to do it the other way round (via the 28 degrees account) but prefer not to. Times like public holidays it's anyone's guess as to when it will get there.

Again, it's not as relevant now with today's interest rates, but having that money sitting against your mortgage each month for every possible day added up.

Yes, the credit card helps. But honestly, with the interest rates so low at the moment, having stuff on credit card for a month isn’t going to make that much difference. You still get the massive advantage of having all your pay sitting there offsetting the loan.

What do you mean the company you've gone with? It's not a bank?

I'd have thought if they're lending you a shitload anyway they might as well chuck in a credit card? Like it's bound to be for less than $70k.

 

Sorry yes a bank. It would probably have been fine if it was part of the original application but I didnt realise until too late that it wasnt. They are not currently approving new CCs

There’s a bank not currently approving credit card applications? That’s very odd.

You’ll get a little bit of benefit if you use a credit card and never let it charge you interest but it can be from any provider.

Its more - should I wait until the old mortgage and card comes off the credit file before applying for another card?

That depends on whether you’re likely to be rejected- not sure anyone can answer that here. If you think your credit score isn’t great then it might be worth waiting.

As rosie said waiting or not depends upon your individual credit rating and circumstances. If you are overstretched and would be considered over the edge with the old details still recorded wait, if there is lots of wiggle room fo ahead. These are items only you can know (ie full state of your financial circumstances).

I wouldn’t bother. As people have said, at such low interest rates, the difference between having your whole pay in there until the 29th day, or having it in there and then trickle away as you spend it, won’t be a huge amount.

If you’re a good saver, You could get the same effect by saving a months worth of pay, leaving that in there, and treating that as your credit card. No chance of surprising fees or credit card interest that way.

And/or schedule your major bills to be paid at the end of the month and then most your pay will be offsetting the loan anyway.

Thanks everyone

Make sure you don't have a $500 fee for a bunch of features with minimal value, just to save $100-$200.

Alot of people seem to take the credit card that comes with the mortgage but it ends up being where the bank earns all their money. Not getting a credit card with the mortgage I think makes things more flexible.

Have you done your sums if a credit card is actually going to be saving you money? Especially when you take into account any fees.

My mortgage came with a fee free credit card, but I had to apply for the card separately. So depending on your mortgage it doesn't cost extra.