Stoozing from Mortgage?

wjhall31 · 21 September 2016 at 6:03PM

Currently I/we have a sizable stooze pot at a little over half household income, all on credit cards.

However with mortgage interest rates so low I was wondering if it might be worth exploring drawing equity from the home, i.e taking low rate credit through the mortgage to save/invest.

e.g rates just with my existing mortgage provider are under 2% for a 5 year fix or under 1.4% for 2 years.

Increasing the mortgage at renewal time to go back up to the 60% LTV from ~50% LTV could release about as much as is in the stooze pot already, so a sizable sum. Stick this in high interest accounts or similar for the deal duration and even not at 0% there's some decent beer money there.

Or for a bolder move, mortgages are a long term product, so longer term investments could be made. e.g stick the accumulated equity into a pension fund. Instant tax boost and time to retirement can approximately match mortgage term while also being long enough to even out most fluctuations that make it a bad idea for shorter term credit.

Thoughts? Anyone withdrawn equity specifically to re-invest in higher interest products?

wjhall31 · 21 September 2016 at 9:20PM

last i renewed, sticking with existing provider I was asked amoung other things if i was looking to increase the amount i was borrowing. I'm assuming that a 'yes' instead of 'no' has you work through a little extra credit checking then spits out cash.

Similarly if re-mortgaging to a different lender, apply for more that is neccesary to pay off the existing lender.

But maybe I'm just naieve in the world of mortgages

adindas · 21 September 2016 at 10:26PM

wjhall31 wrote: »

last i renewed, sticking with existing provider I was asked amoung other things if i was looking to increase the amount i was borrowing. I'm assuming that a 'yes' instead of 'no' has you work through a little extra credit checking then spits out cash.

Similarly if re-mortgaging to a different lender, apply for more that is neccesary to pay off the existing lender.

But maybe I'm just naieve in the world of mortgages

Thanks. Just wonder if you want to increase amount of borrowing is it not the same with asking for loans using your property as a security ?? If this is the case I think it is difficult to get similar rate that your current interest for your mortgage.

Regarding re-mortgaging to a different lender, to pay off the existing lender. How could you increase the amount you are borrowing ??

YorkshireBoy · 21 September 2016 at 10:57PM

wjhall31 wrote: »

Stick this in high interest accounts or similar for the deal duration and even not at 0% there's some decent beer money there.

You may wish to wait until the dust has settled on rates following the recent BOE cut. Santander are halving their rate on November 1st, and if others follow suit (I don't think they'll go as far as halving personally) then it may not be worth your while.

As for investing, I've never used stoozed funds for this purpose...even when I was up at £80K from credit cards. However, others on here have...and some will have got lucky...others not so lucky!

mvarrier · 24 September 2016 at 10:57AM

I tried to something similar recently, release more equity from the house to do a loft conversion.

However, the 30K stooze pot/multiple credit cards raised red flags despite a good income and savings/investments that more than cover the debt.

I have no urgency re loft (still getting plans drawn up) so will pay off a couple of cards in the new year and reapply

lisyloo · 26 September 2016 at 10:17PM

adindas wrote: »

Thanks. Just wonder if you want to increase amount of borrowing is it not the same with asking for loans using your property as a security ?? If this is the case I think it is difficult to get similar rate that your current interest for your mortgage.

Regarding re-mortgaging to a different lender, to pay off the existing lender. How could you increase the amount you are borrowing ??

It's very simple.
when you ask for a mortgage you state how much you want.
there is no law that it has to be exactly equal to your previous mortgage
Lots of people get more for home improvements, new car, debt consolidation etc.
If you are borrowing more they may ask what it's for. In this respect home improvements is a good answer and stock market investing is a bad answer.

adindas · 27 September 2016 at 7:59AM

lisyloo wrote: »

It's very simple.
when you ask for a mortgage you state how much you want.
there is no law that it has to be exactly equal to your previous mortgage
Lots of people get more for home improvements, new car, debt consolidation etc.
If you are borrowing more they may ask what it's for. In this respect home improvements is a good answer and stock market investing is a bad answer.

I understand the OP is talking about stoozing not borrowing e.g he does not actually need money to borrow but his intention is to make a profit benefiting from quite healthy margin in interest rates.

With his current rate with existing mortgage provider e.g under 2% for a 5 year fix or under 1.4% for 2 years, I doubt if he could find any bank would want to lend him with the interest rate lower than his current Mortgage especially after the LTV is increased.

Martinslovechild · 2 October 2016 at 12:43AM

I have personally done this, around a decade ago. You need an offset mortgage which offers a drawdown facility and also a 0% credit card which allow you to transfer cash directly into your current account.

I documented everything I did at the time in this post here.

Hopefully you'll find it helpful. Good Luck.

adindas · 2 October 2016 at 11:02AM

Martinslovechild wrote: »

I have personally done this, around a decade ago. You need an offset mortgage which offers a drawdown facility and also a 0% credit card which allow you to transfer cash directly into your current account.

I documented everything I did at the time in this post here.

Hopefully you'll find it helpful. Good Luck.

I have not read it carefully, but my general understanding is that you transfer money from your fee free zero percent on BT to current account and then overpay your offset mortgage. By doing this you actually saving the interest rate based on your mortgage interest at the time. Also it might help you to bring down LTV the next lower level.

If the bank demand the immediate payment on your credit card balance which is normally in a short notice you use your offset mortgage which offers a draw down facility to pay it, thus increase your LTV back.

I think it is difficult (if any exist) to get an off set mortgage with a competitive rate beating the current interest rate the OP is currently paying. In general the choice is either getting a very competitive interest rate like the op is getting or flexibility with offset mortgage but at higher interest rate. You can not have it both. In this situation it is more doable to find a saving or higher interest current AC paying higher interest than the OP mortgage interest rate.

YorkshireBoy · 2 October 2016 at 11:15AM

adindas wrote: »

I have not read it carefully, but my general understanding is that you transfer money from your fee free zero percent on BT to current account and then overpay your offset mortgage.

No. You have a mortgage account and a savings account that is linked to it. The savings account pays no interest, but the balance of this account is offset against the mortgage. So if the mortgage is £100K and the offset savings account balance is £50K then you only incur interest on the £50K difference.

If you manage to get to 100% offset (using either your own money or stoozed funds) then some lenders had (maybe they still do?) an option to stop payments altogether. The cash that you would have been paying the monthly mortgage payment with can then be diverted to regular savers (back in my offset stoozing days these were paying 8/10/12%.

If the bank demand the immediate payment on your credit card balance which is normally in a short notice...

They can't do this, except under extreme circumstances, ie if you die(!), are made bankrupt, or commit fraud.

I think it is difficult (if any exist) to get an off set mortgage with a competitive rate beating the current interest rate the OP is currently paying.

You might not need to better the rate, but you'd need to do your sums.

Stoozing from Mortgage?

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