Stoozing is a false economy - cost to credit rating

System

Here's an idea - borrow say 30% but put into say VLS80 or 100, that way you get a decent overall return, can pay it back quite easily and don't dent credit utilisation much, if anything building credit history. Because putting a larger amount into low risk exposes you more to fees (both card and investing fees) - thus this is safer than say 100% in VLS 20

adindas

MatthewAinsworth wrote: »

Here's an idea - borrow say 30% but put into say VLS80 or 100, that way you get a decent overall return, can pay it back quite easily and don't dent credit utilisation much, if anything building credit history. Because putting a larger amount into low risk exposes you more to fees (both card and investing fees) - thus this is safer than say 100% in VLS 20

It is a consensus investing should be aimed for a long term, not short term. Doing this you will be riding the boom and boost of the fund performance. The history has proven that investing in funding will outperform saving in the long run sometimes quite significantly.

The problem with your approach is that, no 0% on BT / Money transfer credit card that will give a you a long-term commitment (Say more than five years). Most of them (If not all) are less than five years.

What happen if the value of your fund are valued lees than initially invested when you already need to pay back what you owe?

What happen if the bank suddenly asks you to return all of the money you owe before the end of the deal?

But this does not suggest it is not a good idea, you just need to accept the risk, anticipate the problem that may emerge and should be able to provide a back up plan when this kind of things happen.

True stoozing is risk free. For that reason many stoozers put their money in the FSCS easy access saving accounts that could be withdrawn anytime when needed or have a very sound back up plan. Otherwise you will be doing a calculated gambling.

System

Your last paragraph is the key, with a small borrowing it should be more reasonable to pay back without a sale and/or from balance transfers - that way 1 new BT card could theoretically bail out 3. And with a small borrowing, minimum payments eat into it more. I assume that a bank won't ask for it early unless you somehow break a rule. The larger the scale of it the safer it'd have to be assuming that trying to repay it could be a strain.

It's unsecured, compared to a mortgage, so its trading off one risk against another. Bear in mind a remortgage could be an (undesirable) bailout which would improve affordability again for new cards

vacheron

My 0% stooze of 65K is offsetting my mortgage at 3.19% and so is saving me around £2,000 per year.

As I have a mortgage balance of zero it doesn't make any difference to me how high the interest rate of the mortgage is so I have no need to re-mortgage.

I believe a credit report is there to be used to your advantage. Some people say you can't put a price on a good credit report, but I have. I trashed mine in order to earn 2K per year and am very happy with my decision.

Sad_Dad

vacheron wrote: »

My 0% stooze of 65K is offsetting my mortgage at 3.19% and so is saving me around £2,000 per year.

Nearly identical to myself (are you with YBS?) apart from my outstanding mortgage is slightly higher.

My 3.19% fixed rate has just ended so I'm now on their SVR.

Even though I'm fully offset I still want to switch to a cheaper rate of 2.57%. Hopefully I can do this without any credit checks.

System

With a 30% utilization stooze you could even get a card to bail itself out via money transfer in perpetuity

vacheron

Sad_Dad wrote: »

Nearly identical to myself (are you with YBS?) apart from my outstanding mortgage is slightly higher.

My 3.19% fixed rate has just ended so I'm now on their SVR.

Even though I'm fully offset I still want to switch to a cheaper rate of 2.57%. Hopefully I can do this without any credit checks.

I'm with Barclays and fortunately their SVR for me is the 3.19%.

It's certainly worth looking for better deals, especially if you are looking to dip deeply into the mortgage account in the near future.

Unfortunately for me, the only better Barclays offset deals (less than 0.8% lower) are 2 and 5 year fixes which come with ridiculous £1800-£2000 fees, so I'm happy to sit tight where I am and keep my head under their radar!

System

Offset stoozers bear in mind too that if you weren't stoozing you probably wouldn't have an offset mortgage, so the interest you save should be calculated at the non-offset rate I think

vacheron

MatthewAinsworth wrote: »

Offset stoozers bear in mind too that if you weren't stoozing you probably wouldn't have an offset mortgage, so the interest you save should be calculated at the non-offset rate I think

I obtained my offset mortgage in 2010 and began stoozing in 2015.

System

Vacheron - you would've paid more interest on the balance that way possibly? Assuming the mortgage was greater than the amount of cash you have and assuming that the offset rate was higher (sounds it) than normal mortgage fixed rates

Since you can get 2.something % on what cash you have by fixed savings, or mortgage overpayment.
Because unless you have a large amount of cash why offset? As you know you can borrow at 0% anyway so why would anyone borrow at a mortgage % unless to clear a stooze?