Mortgage stoozing

molotour

Has anyone tried to replace some or all of their mortgage with 0% credit card debt ? I have a repayment mortgage where overpayments are allowed free of charge. I am planning to pay off the mortgage with a few 0% credit cards and then transfering the balance when the 0% offer ends ad infinitum. Has anyone else tried this and what problems did you encounter ?

noh

molotour said:

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I am planning to pay off the mortgage with a few 0% credit cards and then transfering the balance when the 0% offer ends ad infinitum. Has anyone else tried this and what problems did you encounter ?

The problem is that you will find it very difficult if not impossible to continue to find 0% balance transfer offers at the time you need them.

molotour

I have not had a problem finding a 0% balance transfer before as my credit score is excellent. I can see a problem with the minimum payments though. It wont take much credit card debt for it to equate to my mortgage payments. I have calculated a mortgage debt that is 4 times more than a cc debt equates to the same monthly payments. I think this plan will only work if your mortgage is coming to an end, your credit score is good and the balance remaining is on the low side.

born_again

You won't be able to use a balance transfer card to pay your mortgage.
Balance transfer is only between credit cards.
You would be looking at a money transfer card. So transfer funds to bank acc & then pay mortgage.

Also do not expect 0% offers to keep coming. Plan on paying off in your 0% period.

molotour

instead of saving the cash as per stoozing my idea is to overpay the mortgage. I have kept different 0% balance transfer cards rolling for 7 years now with an initial 12k debt which i have almost paid off now. The 0% offers just keep coming for me.

id311299

molotour said:

instead of saving the cash as per stoozing my idea is to overpay the mortgage. I have kept different 0% balance transfer cards rolling for 7 years now with an initial 12k debt which i have almost paid off now. The 0% offers just keep coming for me.

I have been doing something similar since 2017 that allowed me to save for the deposit for our main house, and then for another deposit for buying a second property (a flat for an elderly relative to live in). If you do it right, it can work wonders. I will be trying to use the same tactic to wipe out the second (flat) mortgage as it is up for renewal first. There is nothing special in terms of how to do it - all your expenses on long 0% purchase card(s), all your income cash saved in a good savings account until you need it to achieve your goal (purchase, pay off mortgage balance after deal end, etc.), and keep moving the credit balance. Even if you have to pay fees for the balance transfers, in the worst case scenario they are usually in the region of 3%, which for a 30 month 0% deal is the eqivalent of borrowing at sub 1.5% rate - way less than any other credit line available, and with current rates on savings will be definitely offset by the savings interest.

In your case you are aiming at ending up with no mortgage, but a large balance on credit cards that can be kicked further down the road, slowly reducing as time passes. If you track your deal expiration dates and ensure your credit situation is good enough when you need to move some balance, it is doable.

vacheron

I've been doing this with my offset mortgage over the last 8-10 years.

During this time I have kept a balance on 0% credit cards averaging between £55-75k (it actually peaked at £108k for a short while). This has allowed me to keep the money in my offset account which saves me the equivalent amount of interest on my mortgage.

I currently have five 0% cards totaling £74,300 which given my current variable mortgage rate of 5.24%, is saving me approximately £325 per month in interest, (just short of £4k per year).

With no word of a lie, I actually applied for a new card from Natwest about 3 hours ago as they are offering 0% on balance transfers for 22 months with no transfer fees. They accepted me with a limit of £18k, so that should keep me ticking over for a few more months.

My only warning is that with my offset mortgage, I can immediately draw down the funds to pay off all the cards if the companies all called their debt in (highly unliikely, but permitted in their T's and C's), or I can't find another fee free 0% card to roll the balance over onto.

Permitted overpayments to a standard mortgage are not nearly as instant or liquid as this, so be very careful before proceeding.