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  • FIRST POST
    • mdrswan
    • By mdrswan 9th Jan 18, 12:39 PM
    • 5Posts
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    mdrswan
    0% Credit Card to overpay mortgage debt
    • #1
    • 9th Jan 18, 12:39 PM
    0% Credit Card to overpay mortgage debt 9th Jan 18 at 12:39 PM
    Hi,

    I was after some advice please on using a 0% credit card to help with overpaying mortgage debt. My wife and I currently have £80k remaining on our mortgage with a 2.4% interest rate and roughly £35k in equity. The mortgage term ends in October this year and we can overpay by £8k until then without penalties.

    We also have a credit card with £1200 current debt with a potential balance of £8500. It was only taken out in October and has 0% left on purchasing until November 2020. My idea is to use the card to spend on mainly food shopping bills for a little while and use the money instead to overpay on the mortgage. I won't max out the card but thinking of up to around £5k. Then when I remortgage again in October I will then focus on paying off the credit card as I'm likely to get a better rate on the remortgage because of the overpaying hence extra money available monthly.

    My wife is against it despite me being adamant but can anyone else on here advise on if what I plan is recommended?

    Thank you.
Page 1
    • BoGoF
    • By BoGoF 9th Jan 18, 12:48 PM
    • 2,839 Posts
    • 2,086 Thanks
    BoGoF
    • #2
    • 9th Jan 18, 12:48 PM
    • #2
    • 9th Jan 18, 12:48 PM
    Having a reduced mortgage balance may reduce your LTV and therefore open up better deals.

    However having increased credit card may affect lenders calculation on affordability.
    • mdrswan
    • By mdrswan 9th Jan 18, 12:50 PM
    • 5 Posts
    • 0 Thanks
    mdrswan
    • #3
    • 9th Jan 18, 12:50 PM
    • #3
    • 9th Jan 18, 12:50 PM
    Having a reduced mortgage balance may reduce your LTV and therefore open up better deals.

    However having increased credit card may affect lenders calculation on affordability.
    Originally posted by BoGoF
    Agreed. The mortgage and the credit card are currently our only debt though. No other loans or cards.
    • BoGoF
    • By BoGoF 9th Jan 18, 12:55 PM
    • 2,839 Posts
    • 2,086 Thanks
    BoGoF
    • #4
    • 9th Jan 18, 12:55 PM
    • #4
    • 9th Jan 18, 12:55 PM
    Suggest you play around with various lenders mortgage calculators with your anticipated figures. With some lenders it is surprisingly how much they knock off for a £100 per month outgoing. Though this may only be an issue where looking to borrow the max possible.
    • edinburgher
    • By edinburgher 9th Jan 18, 1:12 PM
    • 10,806 Posts
    • 57,009 Thanks
    edinburgher
    • #5
    • 9th Jan 18, 1:12 PM
    • #5
    • 9th Jan 18, 1:12 PM
    My personal experience of remortgaging is that carrying a small amount of credit card debt made very little difference unless you're on a very low income.
    • juniordoc
    • By juniordoc 9th Jan 18, 7:03 PM
    • 257 Posts
    • 230 Thanks
    juniordoc
    • #6
    • 9th Jan 18, 7:03 PM
    • #6
    • 9th Jan 18, 7:03 PM
    I recently was approved for a mortgage at 80% LTV and have about 8k on 0% credit cards.
    I did exactly what you are suggesting and put all my monthly spends on cards in order to put more towards the deposit and get a better mortgage rate.
    If your wife preferred, instead of using the stoozing to overpay the mortgage, you could put it in high interest current accounts and earn up to 5% on it. Then if it became a problem when you try to remortgage you can repay the balance from the current accounts?
    • A Frayed Knot
    • By A Frayed Knot 9th Jan 18, 7:43 PM
    • 2,205 Posts
    • 9,916 Thanks
    A Frayed Knot
    • #7
    • 9th Jan 18, 7:43 PM
    • #7
    • 9th Jan 18, 7:43 PM
    It is a good idea - but how long would it take you to spend £5000 on your daily/monthly normal outgoings?

    Is there any way you could o/p from the c/c to the mortgage thus reducing a lump sum to the mortgage = less interest charged.

    This way you could save what would have been the monthly o/p's gradually each month till you reach either the amount o/p'd in one/ pay off c/c and repeat.

    I'm sure I read somewhere (but willing to stand corrected) that as from (mid Jan?) c/c were not allowed to charge a surcharge (the usual 2% or so) when putting something on the card. May be completely wrong but would be nice if that was the case
    Always have 00.00 at the end of your mortgage balance and one day it will all be 0's
    MFMarch 30 Re/M Oct 23 Target -Dec 19
    O/P's 2014/£4000, 2015/£6294.69,2016/£3186.80
    2017 £4068.97
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