Can I use a credit card to pay this month's mortgage?

nick78447

Hi there,
Can anyone advise me on this?

I know in theory it's a terrible idea, but if I can just explain the specifics of the situation...

Money's tight this month and having recently completed a 20 month 0% balance transfer I now have a few grand in credit on a card. With cashflow being an issue, and of course not wanting to withdraw cash on a credit card, can I phone up my mortgage company (A&L) and ask to pay by credit card just for this month?

And if I do, would they "hold it against me" in terms of my file?

Oh, and finally - I assume the credit card company don't treat it as a cash advance and charge punitive interest on that money?

Thanks in advance for any advice.

harvey115

Hi

Here is what I think:

Your Credit Card:
- May allow Balance Transfers
- May allow Purchases
*- May not allow money transfers to your current account to pay the mortgage

Your mortgage:
- I assume you are paying through DD
- You may not be able to pay for your monthly repayment over the cash counter through a credit card, some lenders do may not allow this

So, if your card allows money transfer to your current account you can just transfer the money and pay for the repayment of the mortgage for this month. However this has added fees to the transactions usually around 4% charge by the credit card company for the transfer.

However if you can make a payment to your lender over the phone or at branch using the credit card, it simply gets charges as a purchase form the card so not transfer fees by the credit card is applied. (you should check this with your credit card company though)

I think if you pay for your repayment the lender may or may not take this against you. some lenders may think you are going through a cash flow problems. I think it would depend on which lender you are using. Mortgage Brokers would have a better idea about this kind of information as they are a little closer to the lenders than the general public.

Hope this helps.

PS - I am not a financial advisor!

nick78447

Thanks for that Harvey. I am currently paying by DD, and of course I know that I could just withdraw cash on the credit card, pay that into my bank and hey presto. But on a withdrawal of £800 roughly what charges would I incur in "cash advances"?

I guess I just need to bite the bullet and phone up my mortgage company, but I'm really reluctant to "show my hand" as it where and have them put any sort of mark against my completely unblemished record.

Can any mortgage brokers tell me what Santander's attitude is toward this specific issue?

harvey115

If you credit card allows money moving to you account i.e. the way you describe it take the money out form the credit card and pay into my current account. Then there should not be a problem to your mortgage provider because to them you are paying the money from the current account using your original DD.

However if you are not able to move the credit card money into your account where the DD is setup, then you would have to ask your mortgage provider for the credit card payment.

For the charges to move money from your credit card to your current account as I understand is at the moment about 4% of the transfer. for for £800 you would be charged £32. However check this with your credit card company as the charges may differ (I am quoting these charges from MBNA and Virgin cards which provide this money moving functionality).

nick78447

Thanks again Harvey. I checked the "transfer to current account" facility (with Barclaycard) and it tells me that it's "not available to me at this current time). Which is annoying and inexplicable to me, at least.

Your help is much appreciated.

sockpuppet

As far as I am aware no mortgage lender will accept a mortgage payment by credit card (I know mine doesnt)

Be careful if you ring up and pay over the phone as they will generally still go in for the direct debit on the usual date - different systems - as then you will either end up paying two payments for the month or getting charged for a 'bounced' direct debit (possibly by the lender AND by the bank if there are insufficient funds in the account)

gazfocus

sounds like your best option would be to withdraw the cash from a cash machine and pay it into your bank, however, as far as I'm aware, this will then show up on your credit report as a cash advance.

nick78447

Sockpuppet - I certainly know some do, just not yet sure if mine does.

Gaz - I agree with the cash advance perhaps being the best option, but you also commented that "it'll show up on your credit report as a cash advance." Would this really show up and have a negative effect on one's credit score? Like I've said, as far as I know mine is unblemished, so I wouldn't want to do anything to affect that.

gazfocus

nick78447 wrote: »

Sockpuppet - I certainly know some do, just not yet sure if mine does.

Gaz - I agree with the cash advance perhaps being the best option, but you also commented that "it'll show up on your credit report as a cash advance." Would this really show up and have a negative effect on one's credit score? Like I've said, as far as I know mine is unblemished, so I wouldn't want to do anything to affect that.

It will definately show on your credit file but not sure what negative impact it will have.

I recently got a copy of my experian credit report and for my credit card it says Status Code, Balance, Previous Statement Balance, Number of Cash Advances, Cash Advance Amount, Payment Code and Promotional Rate Indicator.

I've never had a cash advance so as I say, I'm not sure about the negative impact but it's defaintely something to consider.

harvey115

gazfocus wrote: »

It will definately show on your credit file but not sure what negative impact it will have.

I recently got a copy of my experian credit report and for my credit card it says Status Code, Balance, Previous Statement Balance, Number of Cash Advances, Cash Advance Amount, Payment Code and Promotional Rate Indicator.

I've never had a cash advance so as I say, I'm not sure about the negative impact but it's definitely something to consider.

As far as I understand as long as the Credit Card provides such service 'Cash Advances' etc. There should be NO issue in using them as long as the repayments are correctly paid back on time. I would not believe if it makes any difference to the Credit Report other then just appear in the Credit Card account.

However I do not think Op has this facility available through Barclay Card (correct me if I am wrong). Can the Op take out money using Credit Card from a cash point?

nick78447

Hi Harvey,
As far as I'm aware I can take cash out of the cash machine using the Barclaycard. Surely you can with any card - they just charge you a punitive fee for the pleasure of doing so.

Thanks for giving your thoughts on the cash advances/credit report thing. I'd be inclined to agree that it wouldn't have an effect, in fact it's a facility the company probably wants you to use. The key, of course, is never missing a repayment.