Using balance transfer to reduce mortgage

newbridge

G_M wrote: »

Back in the good old days I bought a house for £70K odd entirely on 0% credit cards.


That gave me plenty of time to do the place up, get a tenant in, and then once the rent started flowing I applied for a mortgage to pay off the cards.

My cousin is thinking of doing exactly the same now! if you are not borrowing on a mortgage, there is no lenders solicitors to question about money. So what is the problem? just curious

eddddy

A much lower risk approach would be to get an offset mortgage for £130k.

As and when you can get 0% credit card deals, you can use the funds to offset the mortgage and pay less interest.

As 0% deals come to an end, you pay off the credit card using funds from your offset account.


But... taking a quick glance at current mortgage rates, many seem to be about 3% to 4% per year.

Most credit cards seem to charge an up-front balance/money transfer fee of about 3%. So you will be 'out-of-pocket' for about a year, before making any savings.

Caz3121

Benbow91 wrote: »

I was thinking instead of getting a mortgage of say £130,000 get one for £110,000 and get £20,000 on two credit cards £10,000 on each and then transfer the balance to two new credit cards with 0% balance transfers which would affectivly be borrowing me £20,000 interest free and would reduce the overall interest paid over the life time of the mortgage?

do you already have a deposit or is this to get a deposit?

Arthritic_Toe

G_M wrote: »

Back in the good old days I bought a house for £70K odd entirely on 0% credit cards.

Ah - the good old days when banks were fast and loose with credit, Grandad could get a 25 year mortgage at the age of 85 and you could remortgage every year to buy Merc's and BMW's despite flipping burgers for a living. What a clever man Gordon Brown was to encourage Northern Rock and Bank of Scotland to lend, lend and lend some more. How I miss the good old days.

steampowered

newbridge wrote: »

My cousin is thinking of doing exactly the same now! if you are not borrowing on a mortgage, there is no lenders solicitors to question about money. So what is the problem? just curious

The problem is that 0% interest deals come to an end. Most of the current 0% offers only last 2 years or so.

It is possible you might be able to balance transfer onto another 0% deal at the end, but that depends on the lending market at the time - noone can predict that.

You could certainly make a (small) profit by stoozing that into savings accounts. More difficult with property, as I doubt you would be making a profit after 2 years given EA fees, conveyancing fees and so on.