Money Transfer to pay mortgage

MallyGirl

Back in the day when interest rates on mortgages were much higher and Egg charged no fee on Money Transfers then this was worth doing (and I did) but now, not so much.

Ben8282

Firstly, 2% of £10,000 is £200 not £2000. You will only save the interest on the £10,000 repaid not the entire amount of the mortgage!
Secondly, what account is going to pay you 4% interest. You wont have the initial interest saving all in one go anyway, it will be built up at 1/12th of the annual total each month. But in reality you won't have the interest saving at all. Your monthly mortgage repayment will simply be lower, assuming the mortgage company will allow things to be done this way and allow the £10,000 overpayment to be used to reduce monthly repayments and not just reduce the term keeping the monthly payments the same.
However, even if you were to put the whole £200 in an account paying 4% interest for 12 months, this would get you all of £8.
So you have saved £208.
Now what do you imagine the money transfer fee would be on a money transfer of £10,000? (Assuming of course that having recently taken out a mortgage of £100,000 you would actually be able to get a money transfer card with a sufficient credit limit).
After the year is up, you need to repay the money transfer. Where is the £10,000 going to come from as you will have already repaid it to the mortgage company. During the course of the year you will have made minimum payments to the cr4edit card. Even at 1% minimum payment (you won't get better) this will be £100 pm that you have had to pay out during the year which I am sure will be more than any saving on your monthly mortgage repayment that may have been made (see above).. This will leave,£8800 plus the money transfer fee to be repaid.
This idea simply will not work and is unlikely to actually save you money.

BoGoF wrote: »

Ok, I
Why on earth would your mortgage payments be £0 if you made a £10,000 overpayment?
.

I think the OP is falsely assuming that the £10,000 overpyament will be accepted in lieu of the first £10,000 worth of repayments.

Alienfish3000ad

great. that blows that idea out of the water.

thank you all for shooting me down. No wonder I couldn't find anything about this on the internet

System

The answer is yes and also no. The money transfer cards out there typically have a 3% fee. It's possible to do it free with a "mule" card, which is where you BALANCE transfer from one cc to another, to put another card into the black, and then call the mule bank and ask for a "refund" into your bank account. The practical issues are that balance & money transfer cards, while being interest-free, still expect minimum repayments (so you can't get the full interest benefit on your mortgage, only part of it) and that getting access to enough balance transfer cards to get enough credit might be tough. On top of that, the bank with the mule card might not like seeing you do this with either a large amount or doing this repeatedly, and might close your account - whether this matters to you is a whole 'nother issue

Let's play devil's advocate and say you managed to find £5,000 credit to do this.

The 5k goes onto your mortgage for a year as an overpayment, saving you interest, only on that 5k. But you still need to pay your mortgage each month, the regular amount. You also need to pay the balance transfer cards' minimum payments, which might be £125-250 per month (YMMV) meaning that £1500-3000 of this "bonus" is actually lost since your monthly outgoings rise quite dramatically. I have actually done this with a personal loan, not a mortgage, but it was a much smaller loan with a much higher interest rate than a mortgage.

tl;dr version: Yes the potential is there but it will be half of what you think and probably not worth the bother.

Don't feel shot down. There are not many of us out there who think outside the box. Most people just follow the herd and sleep their way through life keeping up with the Joneses. The rest of us come up with cunning plans Your plan's called Stoozing, it's just tough to make it worthwhile when interest rates are low. Keep it in mind if banks suddenly start offering great savings accounts

Alienfish3000ad

thanks Atypi Gal. Getting very technical there, not quite sure how the mule card refund works nor some of your acronyms!

But I get the jist, that savings won't really be worth it vs the transfer fees!

Exactly, there's gotta be better ways of churning your money pot around rather than doing the same as everyone else!

Ben8282

The mule card refund as suggested breaks the terms and conditions of the account being put into credit and should not be attempted without regard to the potential consequences which could include return of the funds to origin and closure of the receiving account..

Kentish_Dave

Nebulous2 wrote: »

What's 2% of £10000? (Hint it isn't £2000) and again as someone has said it it is only 2% saved at the beginning of the year.

You're not the first and you won't be the last to come up with a money making plan which is just too good to be true. I may have thought of a few myself!

Details, details.

If you can’t round 2% of 10,000 up to £2,000 then we have to ask what’s happened to modern society.