Paying Mortgage Fee with Credit Card

firsttimemover

I'm looking at a mortgage with a product fee - financial adviser has advised to add the fee to the mortgage, then pay it off within 14 days rather than pay up front, so it won't be payable if anything goes wrong with the application or if I change my mind within the 14 day cancellation period. Santander have said that I can pay this fee with a credit or debit card. A credit card is appealing as they say there is no fee to do so, but I'm worried that the payment could be treated as a cash advance by the credit card company if it is effectively paying off the mortgage balance. Neither Santander nor my credit card company can confirm for sure.

Has anyone done this and were there any fees or are there any IFAs on here with experience of this? The way Santander gave credit/debit card as a default option makes me think it should be fine, but it could be an expensive mistake if not!

Thanks

Mortgage_Adviser

Your mortagge adviser's advice makes much better sense. Do it as he is saying.
Even if you have a cashback/reward credit card the reward is not worth the risk of losing mortgage fee money if anything was to go wrong.

dunstonh

Adding it to mortgage makes more sense.

Paying the fee upfront is a non-refundable fee. If the mortgage falls through, you dont get the fee back. Whereas if you add the fee to the mortgage, you only pay it when the mortgage is advanced.

firsttimemover

Sorry I think I was unclear in my first post

The advice, which absolutely makes sense, is to add it to the mortgage AND pay it off within 14 days of the mortgage going through - if I don’t pay it off within this time, I start paying interest on it which I don’t want to do.

So this isnt a question of if I should add to the mortgage or should I pay it upfront ( as it doesn’t go against my overpayment allowance and interest on it isn’t charged for the first 14 days of the mortgage, so there isn’t a downside as far as I can see), it is simply about how to make that payment once the mortgage has gone through. To pay it off, Santander accept credit/ debit card or cheque. So my question was, will paying it by credit card attract “cash advance” fees?

Edited to clarify: This is a product fee, not the admin fee which will be paid at the end of the term.

firsttimemover

Anyone?

Thanks!

poppy10_2

The two previous posters have already given you the correct answer. The clarification that it is a product fee, not the admin fee doesn't change anything.
Whether there is a cash withdrawal fee would depend on what credit card you are using. But why take the risk at all? What are you hoping to gain from this? Why don't you want to listen to your financial adviser?

When you apply for the mortgage, lenders ask about anything that may change your financial situation in the future. That would include additional debt such as the intended use of a credit card, and to answer untruthfully would see you step into fraudulent territory.
The lender would be able to re-search your credit file post application and if anything changed along the way it would score the application again.
In fact if there was to be a large amount placed on a card the solicitor may let the lender know of the additional borrowing.

firsttimemover

I am not going against what my financial advisor, or the previous posters have said.

The advice is to add the fee to my mortgage. Which I will do. This was never in question.

They second piece of advice was to then pay off the product fee within 14 days to get the best of both worlds - not pay any interest on the fee (I don’t want, or need, 20 years to pay it off) but also ensure that I don’t have to pay if the mortgage goes through.

It is not about a risk with the fee. There is no risk. It is being added to the mortgage. It is simply about the credit card fee. It’s not critical, I can afford to pay by debit card or cheque, but in the spirit of money saving, adding to a 0% card or receiving cashback would be preferable.

The credit card I would prefer to pay on is with Sainsbury’s Bank but they can’t answer if it would be seen as a cash transaction as they don’t know what Santander process it as. Maybe I’m overthinking it, maybe it won’t be seen as a cash transaction at all, I was just surprised that Santander offered it as the default way to pay off the fee once it had been added to the mortgage so hoped someone might have had experience of this.

firsttimemover

Regarding your quote - this isn’t relevant in my scenario as it is a remortgage/change of product with no credit check or affordability being taken into account but that might be a consideration for others.

But we are talking about paying the fee after the mortgage has been transferred, they wouldn’t be making any credit checks after that - it would only be the same as someone securing a mortgage, moving in, then paying for a new sofa/carpet/furniture on a credit card which has no impact on the mortgage - they wouldn’t revoke it and kick you out, and I imagine it is pretty common for people to do this when they’ve spent every penny on moving!

poppy10_2

If your card company can't tell you if there'll be a fee or not then I wouldn't take the risk. The card company sets the rules on what is a cash advance and what isn't. For Sainsbury's bank the cash advance fee is 3% so a hefty charge possible. Just pay via the normal route.

firsttimemover

Thank you, yes that is what I definitely want to avoid

It was Santander that told me to pay by Credit/Debit card - that’s the process, phone up and pay by card - I’m not seeking out any loopholes here - it surprised me that it was an option to be a credit card when it effectively mortgage balance.