Part Payment of House with 0% Interest Credit Card. 15 January 2021 at 11:49PM in Credit cards 47 replies 3.7K views

BucketFull

Hi all.

I am hoping this is the appropriate board to post my question as it is credit card related but also house purchase related.

I have searched the net for interest free loans and discovered that there is no such thing, however, an alternative has often been suggested, which is signing up for a new credit card that offers 0% interest for a year or even more.

My question is, can this be used as part payment towards the cash purchase of a house? I am looking at around £5,000, which I would be able to pay back in a year. This amount could be the difference between being able to purchase a house and not. If I can find a solicitor that accepts credit cards, is there anything else that I need to know about how it works? Can I just withdraw the full amount or do I have to 'buy' something, as the 0% credit card info on the net mentions it's for your "first purchase". I have zero knowledge on the matter. From information on the net, I assume it would take a while (no idea how long) after getting the credit card for the limit to increase?

I have read the thread below, however, the advice provided there of building your account up would not work for me, as this is what I have been doing for several years, however, the prices of houses increase at a greater rate than the time it takes me to save the money I would need.

https://forums.moneysavingexpert.com/discussion/5796866/use-a-credit-card-to-part-fund-a-house-purchase

I have also read that using the maximum limit amount affects credit score. If this is the case, does the credit score go back up after the full amount is paid back within the interest free period, e.g. a year?

Thanks for any advice.

jonesMUFCforever

1. You won't find any solicitor who will do this for you as it would cost them about 3% in fees.
2. To make it work you would need a money transfer credit card - move the money from the credit card to your bank account then transfer it to the solicitor.
3 If asked by the credit card why you want to borrow the money you have to answer truthfully - but by doing this you stand the chance that they will decline it. (Banks do not lend unsecured to purchase land or property)
4 Are you really just £5k short and have you got all other costs covered? Solicitor fees, land registry fees, Stamp duty (if applicable) moving, furniture etc etc.
5 If you are working (I assume that you are if you can pay back £5k in a year) why not apply for a bog standard  mortgage on a standard rate (don't pay fees for a lower rate) of say £25k - use it to pay whatever needs paying then immediately pay back what is surplus - then concentrate on paying the rest. Borrowing on a mortgage rate in your case will not be a lot more expensive than what you have proposed.

Thrugelmir

Solicitors aren't allowed to mix client funds with their own. Funding the purchase with additional debt isn't a wise proposition either. Might cause the withdrawl of your mortgage offer. 

jonesMUFCforever

Thrugelmir said:

Solicitors aren't allowed to mix client funds with their own. Funding the purchase with additional debt isn't a wise proposition either. Might cause the withdrawl of your mortgage offer. 

I don't think the OP requires a mortgage - they are cash buyers.
It was me who suggested a minimum mortgage of £25k to ensure all bases are covered - then they pay back the surplus immediately. (Instead of borrowing the £5k on a card).

MEM62

jonesMUFCforever said:

If asked by the credit card why you want to borrow the money you have to answer truthfully - but by doing this you stand the chance that they will decline it. 

As far as I am aware, there no no such question when applying for a credit card.  

jonesMUFCforever

MEM62 said:

jonesMUFCforever said:

If asked by the credit card why you want to borrow the money you have to answer truthfully - but by doing this you stand the chance that they will decline it. 

As far as I am aware, there no no such question when applying for a credit card.  

There is when you do a balance/money transfer )My last one was to a Lloyds credit card)

gizmo111

jonesMUFCforever said:

MEM62 said:

jonesMUFCforever said:

If asked by the credit card why you want to borrow the money you have to answer truthfully - but by doing this you stand the chance that they will decline it. 

As far as I am aware, there no no such question when applying for a credit card.  

There is when you do a balance/money transfer )My last one was to a Lloyds credit card)

I've just done a Virgin Money Transfer and wasn't asked any questions.

TadleyBaggie

MBNA didn't ask either a few months ago.

BucketFull

Thank you, everyone, for all  your replies and advice. It is really appreciated.

jonesMUFCforever:

1&2. I would be more then willing to pay the 3% (£150) fee that the solicitor would incur if they would accept it.

3. From the other replies here, I see that the question may or may not be asked. If I did have to give an answer, I wouldn't lie. By the way, whilst searching for what 'unsecured' meant (haha), I came across the following info:

"Some loans might be secured on something other than your home - for example, it could be secured against your car, or on jewellery or other assets that you pawn, or you could get a loan with a guarantor (such as a family member or friend) who guarantees to make repayments if you can’t."

The last suggestion could be a possibility as a last resort.

4. Well, if receiving £5,000 was possible, ideally, I would be looking to receive it four months from now, as that is when the amount I will have saved by then plus the £5,000 would add up to allow me to afford a house. Of course, who knows what the house prices will be like in four months time! I have spoken with the solicitor about fees already and am aware of approximately how much that would be, however, I do have to confirm their exact payment terms. I do not need to move in immediately, so moving, furniture, repair costs can even take place a year down the line, after the £5,000 has been repaid.

5. I wish to avoid any option that involves interest, thus, mortgage, a normal 'loan', etc. are not a consideration, hence, the question I posted.

Thrugelmir, are you saying that jonesMUFCforever's point number 2 is not possible?

Thank you all again.

[Deleted User]

You can't pay the fee for the solicitor as that's no longer legal.  

But although you say you don't want to pay interest on a loan, it would likely be cheaper than paying the fee if it were allowed, so your thinking is a little muddled.

Nebulous2

You can get a 0% credit card with a money transfer option. There is a list of best buys on the MSE website. That means they will transfer the money directly to your bank account and you can use it to pay your solicitor. 

They may charge you a fee for the money transfer, but it won't be interest. Occasionally there are 0% fee ones, but they have become harder to find.

A 0% credit card will not stay 0% forever. It will revert to interest after a fixed period. That could be 20.months or so. To avoid interest you would need to ensure you paid it off before the initial fixed period finished.