Would this be a mortage alternative

PeterGroom

HI. Just wondering about an alternative.
I have just 18 months left on my mortgage, currently on virgins variable rate after my final fix just ended. I owe about 8k to them now.
What is to stop me getting a credit card with 8k credit on it on a free for 24 months basis like Santander 123 credit card, paying off virgin mortgage with this card, and either saving my regular monthly payments i would have made to virgin into a saving account, or paying it off the credit card balance each month - hence sidestepping the Interest fee that virgin charge me at the start of each month on the amount left.
Whats the catch (apart from discipline)
Peter

amnblog

How much interest are you going to save on your mortgage on £8,000 over 18 months - £400?


Is it worth it when the card company will probably charge you £150 to take the cash?

PeterGroom

theres no annual fee for year 1 on santander 123 cc. the £24 pa. My interest is about £156 per quater, so there are 6 quaters remaining = £936 interest to be paid until the end.
so Im effectively stopping that £936 bill with interest free cash from santander less £24 for the 2nd year.?
Am I missing something?
Peter

ViolaLass

Have you factored in the transfer fee?

PeterGroom

what would the transfer fee be for? Id just ring up and pay on a cc?

amnblog

You are if you are telling us you are paying 8% interest on your mortgage.


Also, you need to check that you can get cash on the card at 0% and without a fee.

marathonic

PeterGroom wrote: »

what would the transfer fee be for? Id just ring up and pay on a cc?

Obviously haven't thought this through. A credit card costs the bank money to accept. They're not going to let you pay the mortgage directly with a credit card.

What you need is a credit card that allows money transfers. There are some that allow an interest-free period on money transfers as well as the usual interest-free purchases offered on cards like the Santander one you mention.

All will charge a fee to transfer the money to your bank - generally around 4%.

PeterGroom

thanks for that.
Id not thought it through thoroughly at all no.. Only thought of it moments before posting original q.
That was the purpose of the post - to find out any issues to be considered.

NB My numbers are purely what i recall from last time i looked at mortgage statement so will not be 100% accurate, but wont be too far out.

JimmyTheWig

amnblog wrote: »

How much interest are you going to save on your mortgage on £8,000 over 18 months - £400?


Is it worth it when the card company will probably charge you £150 to take the cash?

£400 - £150 = £250

I'd say that was worth it.

JimmyTheWig

What you are suggesting is a form of Stoozing.
Read up about it and come back with any questions.

TrickyDicky101

If you have £8k to pay off that is approx. balance (assuming repayment) over the term of £4k. At 4% interest rate (no idea what you are currently paying but probably not a million miles out) that would represent an interest charge of 4% x £4k * 18/12 = £240 interest.

Given the fee you will likely have to pay, this does not sound like much of a benefit to me.