Help get me into debt...

financialbliss

Hi,

0% interest debt by the way!

Now that I’ve caught your attention with the title, I’m after a bit of advice…

Back in 2007, I stated my aim to become mortgage free before 12/12/12. My mortgage diary is here:

https://forums.moneysavingexpert.com/discussion/572849

Well, we’re doing ok, but I’m short of my December 2012 target by about (at present) £8,951. See 'final push' spreadsheet for details:

https://spreadsheets.google.com/pub?hl=en_GB&hl=en_GB&key=0AnhcWfGMRVgddG92TG9wNkxmVnYtRWxuYTNmMUUtOGc&output=html

So, the plan is to stooze on purchase credit cards with the aim of shifting my mortgage debt from 2.5% at present to 0%, clearing the mortgage and then clearing the cards within their 0% promotional period.

Currently, I’ve two cards:

• American Express platinum - £4,700 credit limit
• Barclaycard Goldfish - £10,000 credit limit

Plus I had a Virgin Money card for a 0% deal, which I closed earlier this year – credit limit there was £5,900 at the time. Always pay cards off in full – never paid any interest.

The plan is roughly as follows:

1) Request a Tesco (*) credit card in November 2011. Slow stooze and pay off the minimum each month, using surplus cash to top up savings. I’ve estimated I’d be able to free up about £400 per month extra to put into savings – possibly more, but I’m erring on the side of caution.
2) Request a M&S (*) credit card in March 2012. Use the M&S Travel money sterling travellers cheques trick to transfer money into savings.

* Or whatever is popular at the time...

Once I’ve enough credit / savings, pay off mortgage, then clear Tesco CC followed by the M&S CC.

The mortgage is a 2.5% variable rate (Nationwide BMR). I’ve increased the mortgage rate slightly each month and once the monthly interest is known, I change the red amount to green. I’ve got savings ring fenced specifically for the mortgage, but should things go to plan, I’d hope to be able to pay the mortgage off between October – December 2012. See the 'Final Push CC', ie with credit cards:

https://docs.google.com/spreadsheet/pub?hl=en_GB&hl=en_GB&key=0AnhcWfGMRVgddFhvQVE3UzI3bTFhc1daRVZ3dkRpMUE&single=true&gid=0&output=html

So, what can I do to make sure I get enough credit to put the plan into action?

I use the Amex card as my main card wherever possible and the Barclaycard Goldfish as a standby when Amex is not accepted.

Should I reduce the Goldfish credit limit – spend about £200 a month on that card – a very small amount in relation to the limit.

Any flaws in the above logic? Any advice greatly appreciated!

Financial Bliss.

Eonel

Good luck! You won't know the credit limits new companies are going to offer you until you actually apply and obviously the limits they offer you will depend on your ratio of salary to avaiable debt. Reducing the limit on Goldfish seems sensible, just allow a bit of time for that to reflect on your credit report.

Just one idea I wanted to plant. How about you do not actually pay off the mortgage, but instead get to the point where effectively the mortgage is 100% offset in savings and sit on that cash until the mortgage reaches true maturity.

Your mortgage rate is 2.5%, but you can get 3%+ in an ISA. For as long as you can sit on that mortgage cash, you can be making a small risk free profit. Plus you have that cash to hand for emergencies. You could consider the mortgage cash as a life insurance policy - instead of paying an insurance company, top-up the same cash as your premiums into the mortgage savings.

Mortgage stoozing

deed02392

Eonel wrote: »

Just one idea I wanted to plant. How about you do not actually pay off the mortgage, but instead get to the point where effectively the mortgage is 100% offset in savings and sit on that cash until the mortgage reaches true maturity.

What does it mean to be effectively 100% offset? Isn't this only possible with an offset mortgage? Or can you borrow money you've paid off already back from the mortgage company?

financialbliss

Eonel wrote: »

Reducing the limit on Goldfish seems sensible, just allow a bit of time for that to reflect on your credit report.

Apologies for not dropping in and doing a "Thanks" earlier - went on holiday a few days later and then promptly forgot about this thread for a while...

I recently requested that my Barclaycard limit was halved from £10k to £5k, which was accepted. Can always review again if need be.

Eonel wrote: »

Just one idea I wanted to plant. How about you do not actually pay off the mortgage, but instead get to the point where effectively the mortgage is 100% offset in savings and sit on that cash until the mortgage reaches true maturity.

Your mortgage rate is 2.5%, but you can get 3%+ in an ISA. For as long as you can sit on that mortgage cash, you can be making a small risk free profit.

Until the end of March this year, our mortgage rate was 4.79% and I was overpaying on the mortgage. Come 1st April, we dropped onto the Nationwide BMR of 2.5%, so since then I've been putting the money into savings @ 3.1%, so I'm already ahead of you there, but thanks for the tip all the same...

I'll be applying for the Tesco CC come early November. Still think it's possible to slow stooze my mortgage debt onto a 0% CC, pay back just above the minimum and save / overpay the mortgage (depending on rates) until it's cleared.

@deed02392 - think Eonel meant theoretical offset. The savings pot balanced out the mortgage debt despite the mortgage account not being a traditional offset.

Thanks for your collective input.

FB.

unhappy_shopper

If you are planning to take the Tesco CC, go through the referral scheme and both you and your friend will get 1000 points each. I have attached the link below for the recommend-a-friend scheme. HTH.

http://www.tescobank.com/assets/sections/credit-cards/pdf/tesco-credit-cards-recommend-friend.pdf?cmpid=offline/recommendafriend/creditcards/leaflet

Eonel

deed02392 wrote: »

What does it mean to be effectively 100% offset? Isn't this only possible with an offset mortgage? Or can you borrow money you've paid off already back from the mortgage company?

Offsetting is easier with an offset mortgage. But if you are paying a relatively low rate of interest it can be done with any interest-only mortgage.

Many years ago (when credit & mortgage deals were easier) I switched my mortgage to interest-only and reset the term to 25 years. But to myself, i know I still want to be able pay-off my mortgage within the original timeframe.

Each month I pay the bank the interest. And I pay the capital into ISAs, savings or Inflation bonds. As long as the interest rate I pay = the interest I earn, I am theoretically offset.

After 25 years, I will give the money back to the bank having had access to it, used it and profited from it as suits me.

& yes, you could re-borrow the money back from the mortgage company that you have already paid them. Just make sure you get it at a reasonable interest rate that you can match in savings.

financialbliss

financialbliss wrote: »

See the 'Final Push CC', ie with credit cards:

https://docs.google.com/spreadsheet/pub?hl=en_GB&hl=en_GB&key=0AnhcWfGMRVgddFhvQVE3UzI3bTFhc1daRVZ3dkRpMUE&single=true&gid=0&output=html

Hi all,
Just been pondering over the credit card stooze plan a bit more. In the above link, I'm suggesting I apply for two CCs to fill the mortgage shortfall gap and stooze / slow stooze.

Suggested timescales from credit card columns in the above sheet are:

• Tesco CC on 7th November 2011 (1% bill payment)
• M&S CC on 12th March 2012 (2.5% bill payment)

Reason I originally did it that way was that the Tesco CC was a lower payment - 1% of balance, so take the 15 months on purchases and pay back minimum and save the remainder. M&S credit card in mid-March, so that it gives me time to receive card and do M&S sterling travellers trick in time for the ISA tax year closure at the start of April.

Would I be better doing it the other way around, ie go for the M&S card first and the Tesco card second?

Only issue in that is that the M&S card has a higher bill payment at 2.5%, so if I get a £4k limit and max that out, I'd have to immediately find a much bigger amount to pay back the debt monthly compared to the Tesco as the initial card which due to slow stooze purchases, the debt there would grow slowly.

Perhaps I'm thinking abut this too much. :rotfl:

Any thoughts?

FB.