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  • FIRST POST
    • stoopyftm
    • By stoopyftm 11th Oct 17, 1:20 PM
    • 23Posts
    • 1Thanks
    stoopyftm
    Using Credit Card to pay off chunk of mortgage
    • #1
    • 11th Oct 17, 1:20 PM
    Using Credit Card to pay off chunk of mortgage 11th Oct 17 at 1:20 PM
    Hi all,


    As the title suggests, taking advantage of credit cards balance transfer offers to pay off a chunk of mortgage and duck the interest on it - anybody ever done this, have any advice, pros, cons, pitfalls?


    I've a clean MBNA credit card with a 15.5k limit, Im thinking of paying a chunk of this from my mortgage. Would there be financial penalties if I used the card to pay money to a financial institution like when you withdraw money (or would the bank even accept a card payment)


    Any advice on the best card to transfer to, obviously the longer the period, lower the % transfer fee, and how much they would give me are the three main points to consider for this, I've got a very good credit rating with no other loans, card debt or other finance apart from the mortgage. I was thinking about Halifax but their offers are for new customers and I already have a Halifax card (nothing on it) and wondered if I could complain as a loyal customer etc etc and maybe could get the terms of the offer, also could offer to open a bank account with them as leverage.


    And does anyone know what kind of percentage monthly min fee I would be looking at?


    Any other advice please go ahead, even if it's don't do it :-)


    Thanks
Page 1
    • chappers
    • By chappers 11th Oct 17, 1:28 PM
    • 2,677 Posts
    • 1,519 Thanks
    chappers
    • #2
    • 11th Oct 17, 1:28 PM
    • #2
    • 11th Oct 17, 1:28 PM
    only you can answer that question, too many factors.
    credit card rate and if 0% then for how long and what do you do when that ends.?
    Mortgage rate?
    any transfer fees and if so how much?
    Min repayment on CC?
    Over what period of time?
    How the reduction would affect your mortgage term/mortgage repayments?
    can you afford both payments?

    without the facts its impossible to comment but gut reaction says that longer term it will be hard to beat your mortgage rate for credit.
    • Ebe Scrooge
    • By Ebe Scrooge 11th Oct 17, 1:31 PM
    • 3,922 Posts
    • 3,305 Thanks
    Ebe Scrooge
    • #3
    • 11th Oct 17, 1:31 PM
    • #3
    • 11th Oct 17, 1:31 PM
    I'd be highly surprised if your mortgage provider would accept credit card payments. Even if they did, it would likely be classed as a cash advance, so you'd pay interest on it from day 1.


    What may be a possibility would be to get a Money Transfer card, use that to deposit money into your bank account, then pay that towards your mortgage. Just do the sums to see if the Balance Transfer fee would make it worthwhile. And obviously, make sure you pay it off in full just before the promotional period ends.
    I may not know much about art, but I know what I like.
    • stoopyftm
    • By stoopyftm 11th Oct 17, 1:43 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    • #4
    • 11th Oct 17, 1:43 PM
    • #4
    • 11th Oct 17, 1:43 PM
    only you can answer that question, too many factors.
    credit card rate and if 0% then for how long and what do you do when that ends.?
    Mortgage rate?
    any transfer fees and if so how much?
    Min repayment on CC?
    Over what period of time?
    How the reduction would affect your mortgage term/mortgage repayments?
    can you afford both payments?

    without the facts its impossible to comment but gut reaction says that longer term it will be hard to beat your mortgage rate for credit.
    Originally posted by chappers

    Yeah, I understand this, but paying anything off at 0% interest is going to be cheaper than my mortgage whether its reduced term or reduced payments, in the long run. The repayments would be over the length of the card 'offer' usually min 2 years IIRC then anything left transfer to another card


    And as long as the repayments aren't more than around £500 pm I can probably afford it, or have the means to take on another couple of shifts if Im struggling.
    • meer53
    • By meer53 11th Oct 17, 1:52 PM
    • 8,867 Posts
    • 12,876 Thanks
    meer53
    • #5
    • 11th Oct 17, 1:52 PM
    • #5
    • 11th Oct 17, 1:52 PM
    Yeah, I understand this, but paying anything off at 0% interest is going to be cheaper than my mortgage whether its reduced term or reduced payments, in the long run. The repayments would be over the length of the card 'offer' usually min 2 years IIRC then anything left transfer to another card


    And as long as the repayments aren't more than around £500 pm I can probably afford it, or have the means to take on another couple of shifts if Im struggling.
    Originally posted by stoopyftm
    All sounds like a bad idea to me. A lot of "probably maybes" in there !
    • MallyGirl
    • By MallyGirl 11th Oct 17, 3:21 PM
    • 1,961 Posts
    • 6,653 Thanks
    MallyGirl
    • #6
    • 11th Oct 17, 3:21 PM
    • #6
    • 11th Oct 17, 3:21 PM
    Hi all,


    As the title suggests, taking advantage of credit cards balance transfer offers to pay off a chunk of mortgage and duck the interest on it - anybody ever done this, have any advice, pros, cons, pitfalls?


    I've a clean MBNA credit card with a 15.5k limit, Im thinking of paying a chunk of this from my mortgage. Would there be financial penalties if I used the card to pay money to a financial institution like when you withdraw money (or would the bank even accept a card payment)


    Any advice on the best card to transfer to, obviously the longer the period, lower the % transfer fee, and how much they would give me are the three main points to consider for this, I've got a very good credit rating with no other loans, card debt or other finance apart from the mortgage. I was thinking about Halifax but their offers are for new customers and I already have a Halifax card (nothing on it) and wondered if I could complain as a loyal customer etc etc and maybe could get the terms of the offer, also could offer to open a bank account with them as leverage.

    And does anyone know what kind of percentage monthly min fee I would be looking at?

    Any other advice please go ahead, even if it's don't do it :-)

    Thanks
    Originally posted by stoopyftm
    I do this as part of my stoozing efforts. I have a flexible mortgage so I can always pay the card off at the end of the 0% period if I can't transfer it to another 0% deal. It needs to be a 0% Money Transfer offer, not a balance transfer offer, and they usually have a fee. You need to do the maths to see if the MT fee is less than the mortgage rate you are paying.

    The percentage monthly fee depends on the card - some are 1%, some 2%, some 2.5%
    • Don80
    • By Don80 11th Oct 17, 3:50 PM
    • 184 Posts
    • 70 Thanks
    Don80
    • #7
    • 11th Oct 17, 3:50 PM
    • #7
    • 11th Oct 17, 3:50 PM
    I was thinking about Halifax but their offers are for new customers and I already have a Halifax card (nothing on it) and wondered if I could complain as a loyal customer etc etc and maybe could get the terms of the offer, also could offer to open a bank account with them as leverage.
    Originally posted by stoopyftm
    I highly doubt that this would be successful. If you don't use the card or pay it in full every month, you're actually costing them money (in terms of the admin to maintain the account) so you don't really have leverage. Opening a bank account is unlikely to change that either unless you had the account with a high balance for some time, but even then...

    It's a bit like me complaining to TSB that I no longer get the contactless cashback as I have had the account for a few years now. I didn't waste my time, I just opened a new account with another bank. You'd be as well just taking out a new card with a different provider.
    • stoopyftm
    • By stoopyftm 11th Oct 17, 4:44 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    • #8
    • 11th Oct 17, 4:44 PM
    • #8
    • 11th Oct 17, 4:44 PM
    I'd be highly surprised if your mortgage provider would accept credit card payments. Even if they did, it would likely be classed as a cash advance, so you'd pay interest on it from day 1.


    What may be a possibility would be to get a Money Transfer card, use that to deposit money into your bank account, then pay that towards your mortgage. Just do the sums to see if the Balance Transfer fee would make it worthwhile. And obviously, make sure you pay it off in full just before the promotional period ends.
    Originally posted by Ebe Scrooge

    Yeah, thanks, that's not an option I thought of.
    • stoopyftm
    • By stoopyftm 12th Oct 17, 1:50 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    • #9
    • 12th Oct 17, 1:50 PM
    • #9
    • 12th Oct 17, 1:50 PM
    All sounds like a bad idea to me. A lot of "probably maybes" in there !
    Originally posted by meer53

    Fair enough I understand that it's not something to be entered into lightly, I work in finance so Ive worked through everything from my end to see if it's feasible, and barring some maybes beyond my control like redundancy etc Im confident I can handle repayments etc.


    I was looking more for advice by anyone whos tried this and recommendations on cards etc or where to or not to look.
    • stoopyftm
    • By stoopyftm 12th Oct 17, 1:51 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    I do this as part of my stoozing efforts. I have a flexible mortgage so I can always pay the card off at the end of the 0% period if I can't transfer it to another 0% deal. It needs to be a 0% Money Transfer offer, not a balance transfer offer, and they usually have a fee. You need to do the maths to see if the MT fee is less than the mortgage rate you are paying.

    The percentage monthly fee depends on the card - some are 1%, some 2%, some 2.5%
    Originally posted by MallyGirl

    This is great advice, thank you very much
    • stoopyftm
    • By stoopyftm 12th Oct 17, 4:58 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    I highly doubt that this would be successful. If you don't use the card or pay it in full every month, you're actually costing them money (in terms of the admin to maintain the account) so you don't really have leverage. Opening a bank account is unlikely to change that either unless you had the account with a high balance for some time, but even then...

    It's a bit like me complaining to TSB that I no longer get the contactless cashback as I have had the account for a few years now. I didn't waste my time, I just opened a new account with another bank. You'd be as well just taking out a new card with a different provider.
    Originally posted by Don80

    Right, I understand thanks. Sounds like Im barking up the wrong tree and money transfer card is the best bet
    • bris
    • By bris 13th Oct 17, 1:03 AM
    • 6,926 Posts
    • 5,949 Thanks
    bris
    Why don't you just make overpayments to the mortgage, I would be surprised if your doesn't allow this. It can take years off the mortgage and no need to shop about in 2 years when the card needs interest paying.
    • Boyder1974
    • By Boyder1974 13th Oct 17, 11:23 AM
    • 6 Posts
    • 1 Thanks
    Boyder1974
    I've done it
    So I took £10k on Cash transfer - the CC charged me £290 for the privilege so this needs to be taken into account. Now I worked it that over the repayment term of the 0% interest period compared to the interest on my mortgage I'll only save about £60 (When taking into account the £290 fee). With me so far..


    I have a mortgage that allows unlimited overpayments (Great product from HSBC) without any penalty. So I could just make overpayments into it that way but it wont have the same saving - you'll save but not as much. I also keep my repayments the same as to reduce my term and not the monthly premium (Although the interest drops a little but the capital doesn't)


    Ok but when I worked out that £10k overpayment on the remaining 16/17 years left on mortgage it saves me in excess of £3k in interest - worth saving.


    Some things as previously mentioned.
    • Must pay minimum back each month (in my case 1% of balance)
    • Must clear the card by end of 0% term or face prevailing rates (obviously there are 0% transfer cards out there so you could just transfer the balance of the money transfer card to one of those a month or so before end of term)
    Good luck with whatever you do but make sure you are disciplined and have the right check and balances in place.


    Its nice to see the mortgage balance go down (Although you have another balance with your credit card.


    I think this works and will continue to do this every couple of years as the savings on the interest is worth it.
    • stoopyftm
    • By stoopyftm 13th Oct 17, 1:25 PM
    • 23 Posts
    • 1 Thanks
    stoopyftm
    Why don't you just make overpayments to the mortgage, I would be surprised if your doesn't allow this. It can take years off the mortgage and no need to shop about in 2 years when the card needs interest paying.
    Originally posted by bris

    I'm about to switch mortgages and can get a better deal with a lower LTV. Im not looking to reduce the term at this point, but rather cut the monthly payments


    Also I'm pretty much 100% certain that I've got the discipline to pay off a card, and if I have anything left over then I can use another 0% balance transfer to clear it. Im not sure I will have same discipline to use 'spare' cash to overpay the mortgage.
    • flower77g
    • By flower77g 13th Oct 17, 8:15 PM
    • 24 Posts
    • 10 Thanks
    flower77g
    I've been doing this too - some of my mortgage was on an old fixed rate of 3.89% with a really high redemption charge but the right to overpay by 10% per annum.

    I used a Virgin Money money transfer card when their money transfer fee was about 1.7%. I was lucky in that Virgin gave me a really high limit.

    Pitfalls:

    - the monthly credit card payment at 1% is higher than the monthly mortgage payment so it worsens cashflow (but pays the original mortgage debt off faster)
    - the building society where I had a mortgage wasn't happy to re-advance the money paid off by the card at the end of 3.89% fixed rate mortgage period. Remedy was to remortgageg to another lender - which was probably a good idea anyway - but I did get asked all sorts of questions about why I had such a high credit card balance (!).
    • fanheater
    • By fanheater 15th Oct 17, 7:37 PM
    • 70 Posts
    • 22 Thanks
    fanheater
    So I took £10k on Cash transfer - the CC charged me £290 for the privilege so this needs to be taken into account. Now I worked it that over the repayment term of the 0% interest period compared to the interest on my mortgage I'll only save about £60 (When taking into account the £290 fee). With me so far..


    I have a mortgage that allows unlimited overpayments (Great product from HSBC) without any penalty. So I could just make overpayments into it that way but it wont have the same saving - you'll save but not as much. I also keep my repayments the same as to reduce my term and not the monthly premium (Although the interest drops a little but the capital doesn't)


    Ok but when I worked out that £10k overpayment on the remaining 16/17 years left on mortgage it saves me in excess of £3k in interest - worth saving.

    Originally posted by Boyder1974
    This is still good practice but slightly ambiguous the way you wrote it. To be clear, assuming that you would've paid the same 10k off the mortgage balance over the same period you pay the credit card back, which I guess is a year or two, you would still save most of that 3k in interest.
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