Using a current a/c transfer to pay your mortgage - Possible


Not sure if there is already a topic that covers this but had a quick look and couldn't see one.

I received a letter from BT today offering a credit card - I was about to put it in the recycling bin when I noticed they're offering, amongst other things, 0% for 12 months on current account transfers (with a 4% handling fee).

This got me thinking - I recently bought a house with a chunky mortgage (over £250k) at a rate of 6.79% (thanks mr credit crunch). I might be wrong, but I'm pretty sure I can make any overpayments I want.

So if, in theory, I applied for the card (and I have a very good credit record so likely to be accepted I think) and maxed out on the current account transfer, put this towards my mortgage and paid off the balance on the card over the 12 months...this would save me more money than it would cost wouldn't it?

Or am I being very simple and am missing something blindingly obvious?

Any help very much appreciated, thanks! :j


  • Yes your correct. as the int free period is 12 months, the handling fee is essentially the rate of interest you need to earn to break even. Therefore, as your mortgage rate is 6.79% you are basically getting a 2.79% margin. The 6.79% is also tax free interest (your won't actually earn it but just won't pay it) so if you were stoozing into a savings account you would have to get a rate of 11.32% (6.79%/0.6 (assuming higher rate tax payer)) to get the same return as the mortgage. Obiously, this is not possible to obtain.

    The problem with using the CC money on a mortgage is it may not be instantly available to pay back to the CC if any problems arise. I have done this but made sure I have enough in savings to cover the CC debt if things went t*ts up.

    From what you've said above I would get the CC and find out what balance you get given. If its small you may not feel it's worth the effort. Get the balance tranfered to your current account (normally 90 - 95% of the credit limit can be transfered over. The CSA will be able to tell you how much as the % normally has to include the BT fee. To caluate this yourself it would be CC limit x 95% (or 90%) x 96% (as 4% fee))

    From here, set up a DD to cover the minimum payments so as not to incur any fees or loss of interest free period. The way I'm reading it (could be wrong) you were planning on paying the CC balance off over the 12 months. You would do better to but the money in savings account and then pay the CC off all in one go. This way you earn a touch of interest as well :D

    have a read of all the guides here (supporting by MSE) to get a full understanding of things. Conventional stoozing has become more difficult of late with fees going up and interest rates going down and thus squizzing margins. Just need to be a bit mor creative.

    I'm sure someone will be along to fill in the gaps i've left.

    Hope this helps
    Mortgage started May 08 @ £144,499 for 35 yrs:eek: Must get mortgage sub £100k by xmas 2011

    Current balance/total OPs/total interest saved/months saved
  • dr228dr228 Forumite
    10 Posts
    Hi, thanks for such a detailed response - That's really very useful.

    I will give it a go and see how it goes!

    Thanks again.
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