Bypassing the interest on your mortgage?

Taffy_Lee

This may be a stupid question, but is there any way of exploiting the 0% rate on transfers for some credit cards to get around paying interest on some of your mortgage?

For example, you get a new CC with a 0% rate on transfers with a credit limit of £5k. Effectively, this CC is lending you £5k interest free, typically for 12 months - so, if your mortgage is £1k per month, could you give the £5k to the mortgage provider and say "here's your next 5 payments, take it all now, and come back in 5 months" and then for the next 5 months, you only accrue interest on the capital less the £5k..........

I'm only a newbie, so don't yell if I'm being naive......

pollyanna24

Sounds like a plan, albeit a somewhat complicated one , but when you get a mortgage, they insist on having a dd come out of a bank, so it probably wouldn't work.

Bargain_Rzl

It is possible if you are able to save the money borrowed at 0% at a higher interest rate than you are paying on your mortgage, and then using the interest you have amassed to pay a lump sum off the mortgage.

Have a look at the "Stoozing - Free Cash from Credit Cards" board for more information. Stoozing is not as lucrative as it used to be, due to the longest 0% deals all having balance transfer fees. You need to be very sure you know what you are doing as otherwise it could end up costing you money instead of making it!

This is most effective if you have an offset mortgage (as it's tax-efficient) but depending on the numbers involved, it should also be possible in some circumstances with ordinary mortgage and savings products.

silvercar

people do do this with offset accounts. stooze the money from credit cards, stick it in the offset and save the interest on that amount - effectively borrowing that money interest free.

It only saves you the interest on the money not the total capital amount as the capital needs repaying back to the credit card company at the end of the time period.

You have to be very organised to do it. It also shoots your credit rating in the foot as it appears you have high outstanding credit card balances, which could affect the amount you can borrow on a mortgage. Be aware that the time period interest free is often less than a year, that any other use of a credit card will be paid off first and that recently credit card companies have introduced a balance transfer fee of around 2%.

Read threads on stoozing on the credit card board if you have the patience for it.

plane_boy2000

In theory yess depending on your product / lender. Mine allows me to overpay and then use the overpayments to fund payment holidays, so I guess if I made an overpayment equivilent to X monthly payments they would allow a holiday, however I am not sure how you would get the money from a credit card to your mortgage co.