Cancelling Loan in cooling off period with 0% Credit Card Balance Transfer

si5584

Okay so this may be a little random one, but I am trying to figure out how to reduce my mortgage term quick and put a 0% balance transfer credit card to good use (NatWest).

Plan would be:

1) Get a loan for my maximum mortgage overpayment
2) Pay mortgage overpayment
3) Apply for NatWest 0% transfer Credit Card
4) Use Balance Transfer to cancel Loan on cooling off period

It is this last part that I'm not sure about, would it work. Will I be able to use a balance transfer to cancel a loan in the cooling off period?

If I can then this would work well but if not then obviously it's useless.

BoGoF

A balance transfer is no good in this scenario as you can't balance transfer a loan to a credit card. Not sure if there are any fee free money transfer cards out there at moment.

prettyandfluffy

I think you would need a money transfer card, so the money would go from the card to your bank account then to the loan provider.

CliveOfIndia

si5584 said:

3) Apply for NatWest 0% transfer Credit Card

You would need a Money Transfer card, rather than a Balance Transfer card - a BT card can only be used to transfer debt from one credit card to another.

There's no guarantee that you'd be accepted, and if you are accepted then you won't know what credit limit you'd be given until your application is processed.  And there will almost certainly be a fee imposed (a percentage of the amount you transfer).

If you do end up getting a MT card then there's no point in using the loan as an "intermediary" step - just get the MT card, then use the money from that to make an overpayment on the mortgage.

Two things to bear in mind.  Firstly, check that the fee for doing the MT would be worthwhile in comparison to the saving you'll make on the mortgage interest.

Secondly, make absolutely sure you'll be able to repay the MT debt in full by the time the promotional rate expires.  Otherwise any remaining balance will start to accrue interest at the card's standard APR, which is highly likely to dwarf the APR on your mortgage.  And remember that you'll still need to make minimum payments to the card every month for the duration of the promotion.

You may potentially be able to BT any remaining balance to another card at the end of the promo period - but it would be a dangerous gamble to just assume that will be the case.