Mortgage on a credit card

Weeman_2

Hi I'm new here and have a question.

We have about £9k left to pay on our Mortgage. Currently paying it off on a repayment mortgage at £255 a month with 3 years to go.

I had a thought that we could pay it off using a 0% credit card and move the balance of this when the 0% ends.

Does this sound like a good plan or am I missing something?

Cheers

djm1972

Unless you have access to a fee-free 0% deal I think you're better off keeping the mortgage...

For example, Egg currently want a 3% fee, which is about twice as much as the interest you're paying over the next 3 years (based on your numbers).

Kaz2904

What is your interest rate? I would recommend that you just increase your payments by as much as you can afford/are allowed. With a loan so small you ought to be able to get shot of it pretty darn quick!

Weeman_2

Ah yes of course there would have to be a fee somewhere to spoil my plan, cheers for pointing that one out djm1972.

Kaz2904, off the to of my head we're paying about 5.95%. I think we'll live with it until it runs it's course.

Ta

Moneygoes2money

I would strongly recommend you read the following post...

http://forums.moneysavingexpert.com/showthread.html?t=493119

You could get a 0% balance transfer credit card without a fee (at time of writing I think Capital One (recent launch - see MSE weekly e-mail dated 19/09/07) and Ulster Bank offer such deals). You will also need Egg Money credit card (not Egg credit card, make sure it is Egg Money). Then this is what you do....

Let's say you have Capital One card. Ask Capital One to transfer a balance of, say, £3,000 from Egg Money even though there is a zero balance on Egg Money. This means you owe Capital One £3,000 at 0% and you have a credit of £3,000 with Egg Money.

Withdraw £3,000 from your Egg Money account into your current account and then give this money to your mortgage lender if the terms and conditions of your mortgage will allow you to do this WITHOUT PENALTY.

This means you are borrowing money at 0% to pay off a more expensive debt (what is your mortgage rate?).

Of course, you now owe Capital One £3,000 and minimum monthly payments will have to be made for the introductory period (6 months I think) then you will have to pay back the £3,000. You may have to borrow back this money from your mortgage lender (otherwise known as drawdown) so it is important your mortgage will allow you to do this.

When the introductory rate of 0% is coming to an end with Capital One, rather than drawing down from your lender, you could try transferring the debt to Ulster Bank to keep the 0% deal going for longer.

This will save you a lot of interest and will help you to pay off your mortgage quicker, monthly overpayments is an additional option but again only if your mortgage allows WITHOUT PENALTY.

Let the forum know what your mortgage interest rate is and let us know whether your mortgage has any early repayment charges (ERC) and any info regarding overpayment terms and conditions would be useful (read your mortgage offer doc or ask your lender).

Hope this helps.

david_hellier

Surely paying off your mortage like this would be treated as a cash advance (not a BT), with its associated fee and higher APR. Sounds like a non starter to me.

You may find the following of use:

Monthly Credit Card Rates and Time Taken to

Payoff £$€1000* and the Interest Paid

Monthly% APR% Time Interest
1 12.68 11y 1m 470.93
1.1 14.03 11y 6m 544.93
1.2 15.38 12y 1m 627.18
1.3 16.76 12y 8m 718.86
1.4 18.15 13y 4m 821.88
1.5 19.56 14y 1m 938.45
1.6 20.98 15y 0m 1071.47
1.7 22.42 15y 11m 1224.44
1.8 23.87 17y 1m 1402.70
1.9 25.34 18y 5m 1612.80
2 26.82 20y 0m 1864.30
2.1 28.32 21y 11m 2170.94
2.2 29.84 24y 3m 2553.00
2.3 31.37 27y 4m 3043.14
2.4 32.92 31y 3m 3693.72
2.5 34.48 36y 10m 4602.18
2.6 36.07 45y 0m 5959.51
2.7 37.67 58y 6m 8211.90
2.8 39.29 85y 3m 12699.05
2.9 40.92 164y 5m 26099.39

*Assumes minimum payment of the higher of £$€5 or 3% per month

david_hellier

Surely paying off your mortage like this would be treated as a cash advance (not a BT), with its associated fee and higher APR. Sounds like a non starter to me.

You may find the following of use:

Monthly Credit Card Rates and Time Taken to

Payoff £$€1000* and the Interest Paid

Monthly% APR% Time Interest
1 12.68 11y 1m 470.93
1.1 14.03 11y 6m 544.93
1.2 15.38 12y 1m 627.18
1.3 16.76 12y 8m 718.86
1.4 18.15 13y 4m 821.88
1.5 19.56 14y 1m 938.45
1.6 20.98 15y 0m 1071.47
1.7 22.42 15y 11m 1224.44
1.8 23.87 17y 1m 1402.70
1.9 25.34 18y 5m 1612.80
2 26.82 20y 0m 1864.30
2.1 28.32 21y 11m 2170.94
2.2 29.84 24y 3m 2553.00
2.3 31.37 27y 4m 3043.14
2.4 32.92 31y 3m 3693.72
2.5 34.48 36y 10m 4602.18
2.6 36.07 45y 0m 5959.51
2.7 37.67 58y 6m 8211.90
2.8 39.29 85y 3m 12699.05
2.9 40.92 164y 5m 26099.39

*Assumes minimum payment of the higher of £$€5 or 3% per month

Martinslovechild

David,

At no point in Moneygoes2money's detail does he mention the words 'Cash Advance' once. He did however mention the words 'Balance Transfer' and this is the key.

Because you're balance transferring the cash indirectly into your current account (and onwards into your mortgage overpayment fund), it ends up costing you just the balance transfer fee (normally 3% but sometimes less) as the APR is 0.0%.

NEVER transfer the cash using the Cash Advance facility - like you've said, it'll cost you big time. However, paying off your mortgage is possible using credit cards - I know, I've done it - there's a full discussion of how I did it in my thread (see the link in Moneygoes2money's entry above).