Paying Off Your Housing Loan With Balance Transfer
Do you like to settle your housing loan faster by paying it with a 0% loan?
Well, you can do it by arbitraging the 0% credit card balance transfer. To be sure, there is a limitation on how this can be done, and most importantly, it must be done with utmost finance discipline and a meticulous transaction record keeping.
Here is how it can be done
First, you charge all your daily necessary living expenses, the must have, into your credit card. Take note on the word “daily necessary living expenses,” it means the essential expenses only, not self-indulgence shopping spree. You than make a balance transfer – select only those with 0% interest. What you try to achieve is instead of paying the credit card of what you have charged for the current month, you simply paying the minimum and dump the “balance” of the money that you owe to your housing loan.
For example, let say you charge RM1,000 of “must haves” to your card (that means you may have buy more than a month supply, beside those daily expenses like meal, petrol, etc), but instead of paying the RM1,000 at one go, you can choose to paying only RM100 to the card and use the remaining RM900 as an EXTRA PAYMENT to your housing loan. Then come to second month, where MOST of your ‘must haves’ already been taking care of, you use that “free” money to pay for the outstanding balance transfer. If you smart enough to do it correctly, over a period of time, you could save quite a lot on your housing loan cost.
Important Point
The key point to remember is while you are try to “blow-up”your credit card charges to meet the minimum balance transfer requirement (usually starts from RM1,000), you DO NOT SPEND MORE THAN YOU BUDGETED. If you do that, it defeats the entire purpose of this exercise.
Beside the “must haves”, if you already PLANNED AND SAVED UP the required money for a big ticket purchase such as furniture, household appliances, etc, this method will work as well.
But do not get too excited yet! Currently only Ambank and EONbank have such a package and they usually only good for 3 months. Therefore the balance must be settled fully on the 3rd month.
Last but not least, to take advantage of the 0% balance transfer, you need to know everything about balance transfer, and have high self-discipline. For more on this, please read “8 Mistake People Make on Balance Transfer.”
The idea of this posting is contributed by Espionage. You are most welcome to share any financial or banking tips through this blog.
Did you enjoy this post? Please Subscribe via RSS. Please also share you comment with other readers..