0% Credit Card to offset mortgage.

Legacy_user

Read about this possibility in another thread. We thought we were being reasonably clever moving our mortgage every couple of years, avoiding fees and taking advantage of special reduced interest rates but it never entered our heads to use a credit card at 0% for anything to do with our mortgage.
Can anyone explain how to do this.

beatthebanks_2

Hi,

What you need is a flexible mortgage or offset as they are commonly known, after this its a simple case of doing a super balance transfer into say a savings account which is linked ac to your mortgage and then you pay no interest on the equivalent amount of your mortgage, this is more beneficial that getting the interest as technically you are not getting interest there is no tax to pay, which if you a standard rate taxpayer it is 20%.

I currently have around £60k offsetting my mortgage all thanks to various cc's at 0%, which save me a fortune around £3.5k a year in interest.

Hope this helps.

Regards

beatthebanks ;D

Galstonian

Try here http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1076883546,34894, then consider having your mortgage offset account in place of a high interest savings account.

System

Thanks to you both for the explanation. Our Woolwich Openplan mortgage tie in period ends April 2005 so we will be seriously thinking about this as an option when the time comes.

david78

This is a very canny way to use money lent at 0%. I do this with my Flexible Mortgage. Because I don't have an offset account its not as convenient to make cash withdrawls from the mortgage so I put a small amount in an instant access account to cover the minimum monthly payments and the rest goes in the mortgage.

The one thing you need to make sure of is that your mortgage allows drawdown of cash because eventually you will need to do this to pay off your loan. This means you need to have an "offset mortgage" or one of the better "flexible mortgages".

If you have one of these accounts already then this is the way to go. If you need to remortgage though you should be aware that the interest rates are a little higher than other mortgages. Check that you will have enough savings and 0% money combined to make it worthwile. As an estimate you need at least one-third of your mortgage as savings or "free" money.

david78

I Must learn to type faster!

Galstonian

If you already have an offset this should be a no-brainer. If you have done the arithmetic and found you have sufficient savings that an offset works for you then free additional savings are hard to refuse.

cloud_dog

Ok, I've read the 0% CC article and this thread and I'm keen to try out this money making scheme.

For years I've always gone for the best cash back card I can find, and I ensure I repay the full amount each month but.............

We (me and ladydog) recently had a baby girl, and the wife will not be returing to work. We have already organised our savings account(s) to pay interest gross (ING %5) so I think it would be useful to take advantage of the above, put it in the ING account and earn interest on someone else's money.

I got to be honest, the one thing that I find a bit unsettling is the actual ringing up to apply and then asking thiem to do a cash balance transfer to my current account - not sure why but I feel 'cheeky'.

So anyone out there want to give me the benefits of their experiences of how to (not exactly lie) but make up debt that I really fon't have to for the CC company so that I can get my hands on £6k - £8k, or more if they'd let me (probably go for the Abbey CC as you only have to repay £5 pm as the minimum payment - unless I've misunderstood Martin's original article.

babysaver

You tell them you're doing the balance transfer to pay off your current account overdraft (which I assume you don't have!!). The CC don't check - they don't care what you use the money for. I know what you mean about feeling a bit cheeky - but you get over it...... ;D

Reaper

You tell them you're doing the balance transfer to pay off your current account overdraft

Or you could start in general terms saying it is to "pay off debts" and see if that is enough for them. It's completely true as a mortgage is a debt.

johnllew

(probably go for the Abbey CC as you only have to repay £5 pm as the minimum payment

If it's the Abbey (or any other MBNA card) or indeed Egg, they won't ask what the money is going to be used for and they won't want to know. They just want your debt so they have a fighting chance of making money out of you. So just ask them to transfer the money to your current account and they will. Don't worry about it.