Recommend a Credit Card to pay Mortgage

alicewilliams

hi guys,

I have a hypothetical question. I don't have a very good understanding of credit cards, nor do I own one....Is there or are there any credit cards that I can use to pay off a lump sum on my mortgage? The reason I ask is because currently my interest is really high (6% fixed until 2016) and I know that you can get credit cards with lower interest rates.

So what can you suggest?

BonkersBonkers

How would you pay back any low cost credit cards at the end of any promotional period?

Why not pop over to the mortgage board and see whether re mortgaging now would be cost effective for you even if you had to pay get out fees form your existing mortgage deal?

alicewilliams

Thanks for your reply. Don't worry about the way I will make repayments...all I want to know is if I can get a credit card with a good rate. FYI, I will start to payback almost immediately, because by using the credit card to pay off a lump sum, I plan to bring down the mortgage payment and this I will use to quickly pay off the credit card debt.

So what cards can you recommend?

BonkersBonkers

Ok lets start again - what kind of mortgage do you have?

Are there penalties for you to repay parts of it? (A lot of fixed rate mortgages will only let you pay 10% without charge)

Finally why bother with credit cards at all? Just over pay the mortgage direct?

alicewilliams

hiya,

I have a 5yr fixed mortgage @ 6% until 2016. Yes I'm allowed to pay upto 10% and since I've already made a lump-sum payment for this year, I can make another payment from Jan 2014. I have made overpayments, but I don't have enough cash to pay a large amount, hence a credit card would be the best option for me.

BonkersBonkers

alicewilliams wrote: »

hiya,

I have a 5yr fixed mortgage @ 6% until 2016. Yes I'm allowed to pay upto 10% and since I've already made a lump-sum payment for this year, I can make another payment from Jan 2014. I have made overpayments, but I don't have enough cash to pay a large amount, hence a credit card would be the best option for me.

A credit card will charge you a minimum of 3% for a cash advance even if you could get one offering this.
This increases your debt straightaway.
Why do you have to make one lump sum now?
Can you not overpay monthly up to the maximum of 10%?
Can you not put surplus funds in a savings account until you have saved the 10% then pay it off?

Sorry if I am not answering your question about credit cards but I can't see a way of doing what you want without it costing you.

lynz68

Would your mortgage provider accept payment from a credit card?

If you have no current credit cards or indeed never had one the chances of you getting a card at a lower rate than your mortgage are slim.


How much money would you be looking for as you are also unlikely it get a high credit limit on the card.

Martinslovechild

The only card which I'm aware of which will allow you to do what you're wanting is MBNA. They offer "money transfers", which essentially allow the transfer of a fixed cash amount (usually max 95% of CC credit limit) directly into your current account.

As an example, they're currently offering the MBNA Platinum Credit Card with 0% for 29 months. Money Transfers are available during the first 60 days and there's a charge of 4% applied to the account. 4% over 29 months is equivalent to an annual rate of 1.65% (4 * 12 / 29).

Assuming you were to successfully apply for the card and receive a credit limit of £10,600, if you then transferred £10,000 (approx 95% of £10,600) to your current account, you'd pay a fee of £400 (which is added to your balance, i.e. you'd repay £10,400), you'd save £1112.13 across the 29 month period compared to the 6% annual rate you're currently paying on your mortgage.

YorkshireBoy

Martinslovechild wrote: »

...you'd save £1112.13 across the 29 month period compared to the 6% annual rate you're currently paying on your mortgage.

The 1% minimum payments made over the period would reduce the actual benefit to £915.24


Stoozing Profit Prediction

Data entered by the user
Balance to be transferred (pounds)...... 10000
BT card interest rate (%) .............. 0
Introductory period (months) ........... 29
Balance Transfer Fee (%) ............... 4
Maximum BT Fee (pounds)................. No Maximum
Min Monthly Payment Type ............... Percentage
Min Monthly Payment Amount (% or pds) .. 1
Savings interest rate (AER %) .......... 6
Tax rate ............................... Not taxed or offset

Your Results
Balance Transfer Fee paid (pounds)...... 400
Stooz pot balance at end of intro ...... 8685.82
Credit card balance at end of intro .... 7770.59
Gross Profit before tax on interest .... 915.24
Tax on interest to be paid ............. 0
Your Profit (pounds).................... 915.24

Created using the Stoozing Calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission.

FireWyrm

I cant see any mortgage lender allowing part of the mortgage to be paid off with a credit card! It would be ridiculous. The idea of a mortgage is that it is secured, on property, you cant just walk away from it unlike unsecured debt.

I think you should check that it is even possible to do what you want because I dont think the bank will let you...the question then, is academic.

Gromitt

FireWyrm wrote: »

I cant see any mortgage lender allowing part of the mortgage to be paid off with a credit card! It would be ridiculous. The idea of a mortgage is that it is secured, on property, you cant just walk away from it unlike unsecured debt.

They don't want to pay of a part of the mortgage using a credit card. They want to do a super balance transfer to their current account, pay the BT fee, and then pay off the mortgage using that amount. So according to the mortgage lender it's a cash deposit.

If the CC is interest free for X months, then even a 4% BT fee would be cheaper than the mortgage.