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Moving mortgage to credit card debt

Hi,

I appreciate the heading on the face of it sounds like a bad idea…..however…I’ve been thinking long and hard about this.

My background, I’ve been clearing debt to the tune of in excess 80k over the last 6 years and doing a decent job of it.

The debt is a long story but suffice to say, lightbulb moment and never looked back. A few blips along the way but overall excel became my best friend and now there is light at the end of the tunnel.

So, to my question, I will have some money transfer offers in late 2025 which I should be able to take and pay off a good chunk of my mortgage. The transfer rate will work out at approx 2% per year whereas the mortgage is around 4%. I know I need to commit to paying this off and history says I will. I may need to transfer again but don’t see this being an issue.

I really would like your thoughts on this plan.

In total it will be about 20k to transfer.

Thanks
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Comments

  • Rodders53
    Rodders53 Posts: 2,540 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    You could lose your job or have an illness of accident that means you can't pay off the way you have been able to in  recent times.

    Over-pay the Mortgage to the maximum allowed each month. 
    Save the rest into multiple high interest and/or regular saver accounts until you can pay off the Mortgage in full.

    If your Mortgage is only £20k left each month's repayment is probably a lot of Capital and much less of is Interest in any case?  Overpayments will reduce the Capital owed and the interest on it as a result.
  • Mark_d
    Mark_d Posts: 1,942 Forumite
    1,000 Posts First Anniversary Name Dropper
    On the face of it the plan might appear to make sense but there is a risk you will get stung badly if things don't go to plan.
    In my view the best strategy is to delay paying off the mortgage.  Investments or even Cash ISA will earn you more than the 4% you pay in mortgage interest.
  • What is your consumer debt situation now? If you still have outstanding debt, then deal with that first and foremost. 
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  • My current debt is 25k. The 20k is a separate part of the mortgage with another 70k outstanding.

    i appreciate it is a risk regarding job etc but I think it’s worth it.

    I would just continue to pay debt off at £700 a month.
  • RAS
    RAS Posts: 34,446 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    What's the debt to income ratio? And do you have an emergency fund?
    If you've have not made a mistake, you've made nothing
  • PixelPound
    PixelPound Posts: 3,046 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    A practical question, is how will you pay a lump sum off the mortgage? You usually can't pay with CC so it will mean a money transfer, this often has a higher transfer rate, have you checked. You also say it works out at "approx 2% per year", so I guess it's a transfer fee rather than interest. How have you worked out 2%? Fee/years on a lump sum is not the same as 2% interest.
    e.g. £20K borrowed for 36 months with a one off 6% fee, you might think as 2%pa but actually it's the equivalent of borrowing £20K at just under 3.9%pa
  • TheAble
    TheAble Posts: 1,664 Forumite
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    edited 31 December 2024 at 5:27PM
    Really don't think it's worth complicating your situation further to save £400 a year.

    Congrats on paying off that 80k though - get the last 25k done and dusted then maybe do some overpayments on the mortgage.
  • PixelPound
    PixelPound Posts: 3,046 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    TheAble said:
    Really don't think it's worth complicating your situation further to save £400 a year.

    Congrats on paying off that 80k though - get the last 25k done and dusted then maybe do some overpayments on the mortgage.
    Surely this is similar to Stoozing where people take money from credit cards and put it into savings (the difference here is you can't pay off the CC quickly should situations change).

    @Debtdescendee Not sure the best place to ask about taking on new debt is in the debt free wannabe section and you might get more positive responses elsewhere, but as always ensure you check your sums and be aware of affordability and potential pitfalls.
  • Hi,

    Joint income is 100k

    The transfer rate is 3.1% over 18 months which is where I get the 2% from.

    I think I’m right on the interest rate but happy to be proven wrong.

  • TheAble
    TheAble Posts: 1,664 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    It's the difference between your mortgage rate (4%) and the transfer rate (3.1%) which you're going to save.

    In other words 0.9%.

    On £20k over 18 months this equates to £143, less any one-off transfer fees you may need to pay.

    Also be aware of any possible mortgage early repayment charges if you exceed the maximum allowed (often 10% of the outstanding balance but will depend on your particular mortgage)
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