Paying mortgage with low interest credit card ?

bongoali

Hi - would be grateful for any links to articles which describe the process of paying off mortgage with 0% credit card - or any other clever 'loop holes' to make money work harder.

I have an Alliance & Leicester mortgage that allows unlimited overpayments. I am about to write to them for a copy of my Mortgage T&Cs to see if they accept payment via credit card.

Hopefully they do, as I want to take out some 0% credit cards and overpay the mortgage. (I understand I will need to make the monthly payments to the credit card and have the balance cleared by the time the 0% term ends).

I imagine I have a perfect credit score (never missed a payment in my life, always paid on time, have been approved +£10k credit on several credit cards at the same time etc at first time of asking) so could potentially get tens of thousands.

Hoping someone can give me some help/info so I can take the next step.

Thanks !

pauljoecoe

I doubt very much that they will accept payments by credit card but good luck anyway!

dunstonh

Most lenders will not accept a credit card. on the rare off chance they would, it would be treated as cash advance.

jamesd

You're right to think that stoozers have investigated this option.

A few mortgage providers will take normal payments by credit card. Others will do it only if in arrears. Better to phone them and ask them when they will accept card payments that are more convenient for you. The only credit cards I know of that pay cashback on such payments treat them as purchases, so you get the cashback without paying the cash advance fee. Most cards will probably treat it as a cash advance, check in advance. It's not often available but when it is it's a good deal.

Council tax is also an option sometimes. Some councils accept credit cards with no extra charge, others either don't accept them or make a charge high enough so it's not profitable to use a credit card for cashback.

If your cards are 0% for purchases you can start to do all possible spending on the cards. The money you don't spend can be used for savings or investments or paid off your mortgage to reduce mortgage interest if your mortgage interest rate is high enough to make it worthwhile. Mostly applicable to offset mortgages but still possible for some mortgages that let you make capital overpayments and then withdraw them - in which case you can overpay then withdraw to clear the cards at the end of the deal.

Buying traveller's cheques is also sometimes possible as a purchase rather than cash advance. Usually it's cash advance but I think that the M&S card lets you buy theirs as a purchase. A cheap way to get the money out of a 0% for purchases card and avoid a balance transfer fee.

If you're content to make investments you can also invest the money. More risk but appropriate for some people.

Stoozing.com is the place to go for in-depth discussion of how to fully exploit stoozing in all possible ways.

bongoali

jamesd - thanks for taking the time to reply.

I thought about phoning A&L but being the cynic I am, thought they might tell me one thing over the phone (that they do not accept credit card payments) when my mortgage contract T&Cs from 2004 might state credit card payment is possible.

Thanks but council tax option and slow stoozing aren't for me, I don't think. Take too long and by the time I've racked up the amounts I'm thinking about will involve a balance transfer fee moving it to 0% credit.

What you describe about making capital overpayments and withdrawing them is what I would/will do because my mortgage interest rate is lower than savings rates.

I looked on Stoozing.com and whilst nobody explicitly said it, I think because interest rates on savings are so low, fast stoozing is not that lucrative at the moment (e.g. when you're paying 3 or 4% balance transfer fee or 4% for cash deposit from credit card to current account).

It seem as thought I'm a couple of years too late to this game?

Jammi

bongoali wrote: »

Thanks but council tax option and slow stoozing aren't for me, I don't think. Take too long and by the time I've racked up the amounts I'm thinking about will involve a balance transfer fee moving it to 0% credit.

Slow stoozing is still far better than No Stoozing, in this game every little helps, after all it's still free money. I certainly wouldn't discount the Council Tax idea if I were you. Paying my Council Tax by credit card adds a welcome sum to my yearly cash back.

jamesd

For those who want to use savings accounts you're right that stoozing with balance transfers is relatively unattractive at the moment. I did very well with investments and would still if it wasn't for mortgaging activity.

Balance transfer stoozing can still pay for those with offset mortgages and/or fixed interest rate deals that are a percent or two higher than variable rates.

bongoali

Thanks Jammi.. I think I would earn about £12 a year cashback for paying by Credit Card so need to think if the rigmorale of setting this up is worth it.

Thanks Jamesd

Martinslovechild

Bongoali,

It can be done. I for one have done it. My full story is here.

However, it's worth noting that a number of things have changed since I did it.

• Currently, mortgage rates are at an all-time low
• BT fees were introduced on 0% deals a few years back and have been creeping up to around 3% in recent years
• Credit has become harder to obtain (for some)

The trick is working out the maths. If you are offered a 0% deal for 12 months with a 3% fee then you have to sit down and compare this against your mortgage rate.

As an example, if your mortgage is 4.5% and the card fee is 3% then you're going to make a profit. It's not a big profit - but it's still a profit all the same. Lots of small amounts of profit add up to make bigger profits...

Let's say you're offered a £7000 limit at 0% for 12 months with a 3% fee. The fee works out at £210. At the same time, you'd normally be paying your mortgage at 4.5%. Therefore, over the same period, £7000 of your mortgage is costing you £315. In other words, moving £7000 of your mortgage onto a 0% card will save you £105.

OK, at this point, you're probably thinking that it's not really worth all the effort. However, if you treat every monthly credit card minimum payment as an 'overpayment' on your mortgage then at the end of the 12 month period, you will have effectively overpaid approximately £2138 (as the card balance is approx £4862 at the end of the 12 month period assuming a minimum monthly payment of 3%).

Here's the really good bit - if you think "really big" and you can afford it, split the £7000 on the credit card into twelve equal amounts (£580 per month approx) and in your head, treat each monthly payment as a mortgage overpayment. Then, after 12 months, your mortgage balance is £7000 less and every subsequent year you'll be saving £315 in interest due to the capital repayment.

So, assuming that there are 15 years outstanding on your mortgage, you'll be saving approximately £315 x 15 = £4725 (it will actually be more than this because you're clearing the debt faster than the original schedule). Therefore, your investment of £7000 has actually snowballed into a saving of £11725 (minus the original BT fee) over 15 years.

Do another 0% BT the following year and you'll save another load of money. This is truly the real way to clear your mortgage.

Bear in mind that it gets progressively more & more difficult if you start loading up with credit cards. This is what I did - however, it was much easier to obtain credit 5 or 6 years ago - and BT fees were non-existent too which made for increased savings/profits.

However, I realised very early on that moving chunks of my mortgage onto credit cards would make savings, but wouldn't really help me in the long run in clearing my mortgage - the big thing I learned was that once most of the mortgage was at 0%, I had to hammer the debt by making as many overpayments as I could - either through direct overpayments into my mortgage account or by paying much more than the minimum monthly payment each month on the credit cards.

I set myself a budget and stuck to this like glue. For one, I didn't have any idea as to when the 0% bubble might "burst". I also didn't know if I was going to come "unstuck", i.e. what level I could possibly get to before banks ceased to offer me further credit (it was much more than I possibly could have imagined at the outset!).

If you're going to go down this path, get a spreadsheet at the ready, decide on what you can afford each month to make in overpayments and you're on your way...

Good Luck.

jinkster

What about for clubcard points/ airmiles etc?

huangdi

i discovered stoozing around this time last year.
As i did not have an egg money card (couldnt get one as i had one previously), i did the M & S traveller cheque loophole.

Basically, get an M & S credit card. if you use it to purchase Sterling travellers cheques they only charge 1% fee(4000 pounds is only 40quid fee). dont do it all at once though!
Nationwide simply treated the cheques as normal without any charge straight into a new account i set up for this. then i whacked the money into my offset mortgage account. as long as you keep up the repayments etc and BT after 10 months if needed . the saving isnt massive, but it is much better off in my pocket :j

there are other methods depending on your situation.