'Revolving Credit' type mortages - anyone done or doing this?

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12 years 7 months ago #311220 by George
We had one of these too. I think they are great if you are self disciplined with money but not good if you are easily tempted into spending.

We choose it because we had some savings that we wanted to keep access to and it made the most sense to put the savings into a revolving credit mortgage and then not pay mortgage interest on that amount. We also spent everything on our credit card and paid it off at the end of the month so the money was in our account for longer.

If you have savings it totally makes sense because even if the interest rate on the savings is the same as the mortgage interest rate (unlikely) then you pay tax on the savings interest so you are not making as much money on the savings as you are paying in mortgage interest.

I really enjoyed watching the outstanding amount decrease each month - it felt like we were getting somewhere with paying off the mortgage. Ours was with ASB but I also like the sound of the BNZ version where you keep separate accounts but the total balance counts for the interest.

I wouldn't pay someone to organise it either. You can check all the mortgage rates online at interest.co.nz, and if you know that you want this kind of mortage it is easy to set up.

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12 years 7 months ago #311222 by jen
You could do revolving credit on the amount you're expecting to spend only..and keep up with some regular repayments on the rest. We did this when we used it, the repayments came out of the revolving credit account. Then we just 'saved' money into the revolving account.

jen (returned to townie life)
community.webshots.com/user/j_nepton

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12 years 7 months ago #311264 by reggit
Gracelands, good to hear from you! :D You've been really quiet...and sounds like you've moved to the big wide world of self-employment, good on you! [;)]

Andrea, you should NEVER have to pay for that sort of 'service' for something so straightforward unless your credit is so bad that you need an expert to sort every last bit of it out and bribe someone to take you on (joke, but you get my drift [}:)]).

Take a break...while I take care of your home, your block, your pets, your stock! [;)] PM me...

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12 years 7 months ago #311305 by pataka
Revolving credit worked really well for us - mortgage free after 8 years!!!

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12 years 7 months ago #311340 by Pumpkingirl

pataka;295941 wrote: Revolving credit worked really well for us - mortgage free after 8 years!!!

But you were the one putting money in!!![;)] :D

Well done, that's an outstanding effort :D

My original goal was to pay off my mortgage in 10 years but it turned out that was slightly too ambitious. My new goal is to be mortgage-free by the time I'm 50 and that's [:0]mumble[:0] years away and very achievable.

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12 years 7 months ago #311342 by pataka
True - but the savings we made on not paying compound interest on our compound interest is such a huge benefit. I hate to say it PG but you will be 50 before you know it!!! Another year has almost gone - and I am sure time speeds up the older I get - its just all a bit of a blur these days!!!

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12 years 7 months ago #311357 by Jan
Hmm we called ours the REVOLTING CREDIT...say no more lol.

Jan

______________________________________
North Wairarapa on 30 odd acres of paradise.
ahorseofcourseormaybetwo.blogspot.com/

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12 years 7 months ago #311867 by clover
Worked great for us. Depends on financial and personal situation though. If you are very disciplined with money and have good regular income RC mortgages are great. We are good savers (Scottish heritage!) & got bitten by penalty fees when we tried to put lump sums against mortgage on our first house so went with RC when we bought LSB and built. Pretty much entire joint salary (apart from a wee bit of 'sanity money') went directly into RC account so as to have the interest payable on lowest amount possible for as much of each month as possible. All purchases on the visa, then visa paid in full each month so no visa interest & the bonus of cashbacks on visa account with Nat Bank. Any lump sums (bonus etc) directly to mortgage. Plus we made a commitment to live student style (majorly tight budget!) for the first couple of years. Mortgage on home & LSB paid within 5 years & then able to use credit facility for property investment without incurring new mortgage fees. Was hard going especially initially as you work hard but never seem to see day to day reward, but once the mortgage started coming down majorly ie the day it got to under 100K, it all seems worth while! Not sure it would be so easy these days - 2 kids & 1 salary means that the new block of land is a split mortgage, part RC and part fixed.

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12 years 7 months ago #312027 by arnie.m
Worked great for us when we had a seasonal business 8 months good turnover and 4 bad, worked out we saved ourselves 5% interest over the year (then rate was 12.5% a few years ago now) Horses for courses I suppose.

arnie
88 Valley
Nelson

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12 years 7 months ago #312558 by Joybells
We had one when in a small business. It only works when you have lump sum amounts coming in to keep the interest down. Everything has to be put on accounts or credit cards so you are not constantly drawing on it and therefore paying only once a month. Good for high income earners.

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