Stoozing with an offset mortgage

franky1981

Hi everyone

I need some advice on stoozing to pay off some capital on my offset mortgage.
Plan is to get a 0% virgin 16 month credit card. Do a super balance transfer to my current account which is linked to my offset mortgage account.
Lets say I borrow £1000 and then I pay it off my mortgage immediately. It is fixed for 3 years at 4.29%. With a transfer fee of 4% will I make money over 16 months, with the savings on interest on the £1000 lower mortgage? Can anyone help me calculate this? Can I pay off the credit card after 16 months in one lump sum?

Thanks

nzseries1

There is a stoozing forum, where you might like to repost.
But... according to this page:
http://www.stoozing.com/calc.php
You would make £6.02. That's a small profit... but you're likely to get a much higher limit than £1,000 if you have a good credit history. Try playing with the calculator and see what you get.

Stoozing Profit Prediction

Data entered by the user
Balance to be transferred (pounds)...... 1000
BT card interest rate (%) .............. 0
Introductory period (months) ........... 16
Balance Transfer Fee (%) ............... 4
Maximum BT Fee (pounds)................. No Maximum
Min Monthly Payment Type ............... Percentage
Min Monthly Payment Amount (% or pds) .. 2.98
Savings interest rate (AER %) .......... 4.29
Tax rate ............................... Not taxed or offset

Your Results
Balance Transfer Fee paid (pounds)...... 40
Stooz pot balance at end of intro ...... 646.95
Credit card balance at end of intro .... 640.93
Gross Profit before tax on interest .... 6.02
Tax on interest to be paid ............. 0
Your Profit (pounds).................... 6.02

Created using the Stoozing Calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission.

CannyJock

I'd knock a month off the promotional period and calculate it over 15 months. This allows for fund transfer times and a safety margin on repaying the card a week or so before the promotional period ends.

Note that the BT fee is 2.98%, not the minimum repayment. The minimum repayment is a fixed amount of £ 25 or 1%, whichever is greater. Doesn't change the figures much on £ 1000 (profit of £14.76 over 15 months) but does on £ 10,000 (profit of 204.21 over 15 months).

And just to check, do you mean pay off some capital or offset some capital? Paying off the capital with the stoozed funds leaves you the problem of how to repay the card before the promotional periods. Offsetting the capital allows you to repay the card from the offset savings account stoozepot.

nzseries1

CannyJock wrote: »

Note that the BT fee is 2.98%, not the minimum repayment. The minimum repayment is a fixed amount of £ 25 or 1%, whichever is greater. Doesn't change the figures much on £ 1000 (profit of £14.76 over 15 months) but does on £ 10,000 (profit of 204.21 over 15 months).

Sorry, you're right that the minimum payment is not 2.98%. But I'm quite sure that the fee for a Money Transfer is 4%.

CannyJock

nzseries1 wrote: »

Sorry, you're right that the minimum payment is not 2.98%. But I'm quite sure that the fee for a Money Transfer is 4%.

Yup it is, 4% for balance transfers direct to current account, 2.98% for balance transfers to other credit cards. Bit of a moot point for the OP unless they get a significant credit limit to offset against. Then again, every little helps.

LongTermLurker

Bear in mind that when offsetting, the gain is effectively tax free (ie it's not income, it's prevention of debt, therefore there's nothing to pay tax on). Thus using CJ's figure of £204.21/15 months, a basic rate tax payer could equate it to a £255.26 savings rate and a higher rate taxpayer could equate it to an income of £340.35