Opinions on mortgage strategy

nothingdoing

Hello, I thought I'd outline my plan and see what you lot thought of it. I have a 114k mortgage on a 140k flat and my plan is to:

1. transfer to an offset (current + savings + mortgage) account with IF
2. use a CC for all my payments and pay it off in full at the end of each month ensuring therefore that my current account always has a lot in it
3. Apply for schmoozing credit cards and transfer the credit into my bank account and pay off in full at the end of the term (usually 12 months)

As far as I can see, with a couple of credit cards a year I should be able to save a couple of grand each year & pay back the mortgage about five years early.

I was wondering if anyone could see a fatal flaw in the plan before I go ahead!

Thanks everyone!

Joe

Locoblade

A couple of questions / observations, firstly IF seem to be pretty expensive rates, by my estimation you'll only qualify for their >85% LTV product which is +1.99% above BoE, so 6.49% at the moment, and with a £999 fee!?

If you can get a reliable £140k valuation, with only £2k paid off your £114k capital you could scrape in with First Direct with an 80% LTV, then you could get an offset tracker either at +0.79% with no fees, or +0.49% with a £999 fee, both with no early repayment charges unlike IF.

The rest of the plan looks sound to me, but for info it's stoozing, not schmoozing

nothingdoing

you can tell I'm a newbie! I negotiated a 5.8% rate with them for three years so hopefully that'll last til I can afford an 80% rate!

Thanks for the advice and sense-check, very useful,

Joe

getmore4less

nothingdoing wrote: »

Hello, I thought I'd outline my plan and see what you lot thought of it. I have a 114k mortgage on a 140k flat and my plan is to:

1. transfer to an offset (current + savings + mortgage) account with IF
2. use a CC for all my payments and pay it off in full at the end of each month ensuring therefore that my current account always has a lot in it
3. Apply for schmoozing credit cards and transfer the credit into my bank account and pay off in full at the end of the term (usually 12 months)

As far as I can see, with a couple of credit cards a year I should be able to save a couple of grand each year & pay back the mortgage about five years early.

I was wondering if anyone could see a fatal flaw in the plan before I go ahead!

Thanks everyone!

Joe

Using the spends on CC route will say give you £1k but if you go for a 0% spend card you can keep the money offsetting for a lot longer (slow stooze)

The current 0% BT CC deals that have 12month+ most have fees around 3% so you don't save as much as the mortgage rate.
http://www.stoozing.com/0fees.php

So a card that give you £10k for 12month 0% with 3% fee and 3% min payment will save you £194.

Triming the interest rate on the full £114k by 0.2% on a will save you £228.

Best thing you can do is spend less so have a go through you outgoings looking for savings there.

nothingdoing

Hold on - surely if I get a 0% cc with a 3% fee then over a year I will pay half the interest on that £10k than I would if I'd have been paying the mortgage company 6%?

I'm missing something here aren't I?

Thanks,

Joe

Locoblade

If you pay the card off at the end of the 12 months, then there is no fee at all. The fee mentioned is if you transfer a balance TO a new credit card, so I think the above was a little confusing with regards to slow stoozing as you'd only need to consider balance transfer fees if you decided not to pay it off at the end of the free period.

getmore4less

nothingdoing wrote: »

Hold on - surely if I get a 0% cc with a 3% fee then over a year I will pay half the interest on that £10k than I would if I'd have been paying the mortgage company 6%?

I'm missing something here aren't I?

Thanks,

Joe

YES, the credit card will have a min payment which adds up over the year

If that is 3%pm you don't have the full £10k offset for the 12months you start with £9700(£300 fee) by the end you will have only £6300 and to make sure you don't miss the dates you will lose a few days at the end and it usualy takes a few days to get to the offset account, longer if you need to use a mule card.

You still save just not as much as you think, so you have to be sure that any offset rate is competative based on your estimates of the offset pot you can create. trimming the interest rate might be a better option.

I think I got my £10k calc wrong plugging it into the calculator http://www.stoozing.com/calc.htm gives £211 against the full £10k at 3% saving of £300.

getmore4less

Locoblade wrote: »

If you pay the card off at the end of the 12 months, then there is no fee at all. The fee mentioned is if you transfer a balance TO a new credit card, so I think the above was a little confusing with regards to slow stoozing as you'd only need to consider balance transfer fees if you decided not to pay it off at the end of the free period.

I was talking two seperate types of stoozing slow and BT.

MOST BT cards have an upfront fee these days, 3% is very common.

There are few short term no fee offers, life time BT are also worth looking at if you can find a no fee and low rate.

Slow stooze are purchase cards that don't have any fees(I've not seen one that does may be wrong).

Both will have interest if you go beyond the interest free periods(dates and payments need checking carefully).