Can I pay my mortgage using a credit card?

Nice_guy

Hi all,

Whilst waiting for my First Direct offset mortgage to go through I am currently researching which 0% credit card I should apply for so I can keep my funds offset for as long as possible.

I have narrowed it down to the Tesco CC and the FD CC both of which have 12 months 0% on all new purchases.

My mortgage is setup so I pay only interest payments per month with the option to make regular, lump sum or ad hoc capital payments as I wish. I have already asked FD if I can pay my monthly interest payments by credit card - the answer was no, it has to be a direct debit from a FD account. Fair enough.

But what about the ad hoc/lump sum payments?

Say if my partner and I each had credit cards with a combined limit of 10k. Would it not be worth while to make a lump sum payment of 10k using the CC to the mortgage account? This way we could benefit from lower monthly interest payments as our overall balance would be lower. Then before the 12 month period ends pay the balance on both cards in full.

What do you guys think?
Views and opinions are welcomed

:beer:

Markyt

Ask them. Different places have different policies - mine only takes CC payment for arrears cases.

Generally, they view CC payments as being because a borrower is having problems, and I'm not sure there systems will be able to differentiate between an normal payment and an overpayment when it comes to a CC payment.

RomansProperties

If you get a virgin card they can do a balance transfer into your current account and then this can be used to pay the mortgage.
I think its 16 months interest free on the virgin card but I may be wrong on that one

opinions4u

Some lenders will accept credit cards for arrears payments, but I'm not aware of any that will for overpayments.

After all, they have to pay a fee for accepting it.

A similar plan would be for you to do all your household spending on a 0% card, pay the minimum payment, plough the rest of the payment in to the offset and enjoy the benefits.

If you can find a 0% card that does cashback / loyalty points, even better.

A couple of weeks before the 0% deal expires, clear it in full from the offset.

Then switch to a new card and repeat the exercise!

If you get a virgin card they can do a balance transfer into your current account and then this can be used to pay the mortgage.
I think its 16 months interest free on the virgin card but I may be wrong on that one

Unless you have a particularly high mortgage rate, it isn't likely to be worth paying a fee of 3% of the capital amount to do this sort of thing.

maninthestreet

I think the only way you can do this with FD is to transfer funds from your non-FD credit card to your FD current account, then transfer the funds from this account to the mortgage account. Of course this will count as a cash advance, so the their will be a fee to pay to the credit card provider.

Nice_guy

Phoned FD today to ask them about this idea. They said they are OK taking credit card payments for overpaying but advised that the credit card provider may make a charge as this type of transaction won't be under a 'retail new purchase' transaction. (so you wouldn't benefit from the 12 months 0% on new purchases)

The term they used for this type of transaction would be a 'cash line' transaction as the money will be taken from the CC and credited to an account with a sort code and account number. FD charge 2.5% for this on their own CC making the idea worthless.

Sure enough I phoned Tesco finance and they advised pretty much the same thing!

Oh well - back to the drawing board!

splatt30

Everything you buy, and I mean everything (even £2.50 on car parking) pay for with your 0% for purchases card. Put that money in an account which offsets your mortgage and don't touch it. Each month pay the minimum amount the cc company asks for and at the end of the 12 months pay it off or balance transfer it (if the balance transfer fee is less than your APR).

This keeps your money offsetting your mortgage for the longest period of time and costs you nothing as the purchase rate is 0%. Best to set up a direct debit for the minimum payment due each month so they can't do you for late charges.

Nice_guy

That was the original plan splatt30!

I just thought if I could use my 0% card to overpay a large chunk i.e 10k then it would be more worthwhile doing this than using the credit limit on the card for everyday purchases. Alas my idea is flawed