Did you know that $1,000 extra on your Credit Card limit can reduce your borrowing capacity by up to $5,500 with some lenders? This can mean the difference between owning a property and not.
Let’s assume our client, Ian, earns 80Kpa. and has a credit card of 10K, no other debts and is single…Now, let’s see how much we can borrow with this 10K card limit and for the exercise we’ll pick Homeloans Ltd as the preferred lender…
10K = 520,074
9K = 524,429
8K = 528,783
7K = 533,137
6K = 537,492
5K = 541,846
This shows that for every $1K of extra credit card limit, your borrowing capacity in this instance reduces by approx. $4350.
TIP: When your bank sends you an invite to increase your credit card limit have a bit of a think before blindly accepting their offer. With this example, bigger was to better.