Feedback wanted for my stoozing plan to overpay mortgage.

di-di-di-dah-di-dah · 25 May 2018 at 11:10AM

Hi there folks I am new to stoozing but really fascinated by the idea.

Here is my plan. We have £108k in mortgage debt at fix intrest rate of 3.2% over next 5 years. Our current LTV is 76% and I would like to go down to 60% by the end of fix term. I have calculated that I need to overpay mortgage by £8000 and then continue with regular payments till the end of term to get there.

So plan is now get 0% credit card or 2 with £8000 between them and use it for all our monthly spending aprox £1000-£1200 a month over the course of next 7 to 8 months overpay our mortgage with all that for the total of £8k.

Then start paying back the credit cards and close them before our term runs out in August 2023. Somewhere in a middle of that term get a 0% no fee balance transfer card to shift the debt so I can continue to pay no interest on just to give us more time to pay it all back.

After that get a new mortgage deal at the end of fix rate and reassess where we stand and possibly repeat stoozing scheme again.

We have £4000 in savings so even if something happened I should be able to clear the cards mostly fine.

Does it make sense?

flower77g · 25 May 2018 at 6:28PM

It's making the assumption that at some point in the middle you can get a 0% balance transfer card with no fee for switching a balance. That probably isn't a reasonable assumption: the length of these cards has been reducing and you might do well to consider what would happen if the replacement card had a one off fee (say 2% - 4%).

If you have £4,000 outstanding at that point the fee would be about £80 to £160 and you need to take account of that. If the lenders will not give you a creidt card at that point you can clear the card at that point using the £4,000 in savings, so you wipe out your savings.

di-di-di-dah-di-dah · 25 May 2018 at 7:04PM

This is valid point. Would you suggest to not stooze whole 8000 but say half of it and then continue to overpay mortgage by less so I still hit my 60 LTV point but also pay back the card so if I have to clear the card with savings it's less of the debt there?

ade2j · 4 June 2018 at 9:01PM

If you were to do it this way you'd want to be able to pay back the full £8000 by the end of the first credit card term. Like flower suggested, you might not get another credit card and wouldn't want to be in a difficult situation where you then you start paying 18% interest.

[Deleted User] · 9 June 2018 at 8:09PM

If you have money on the credit cards whilst you go for the mortgage it'll be taken into consideration, as I had planned to do something similar - but for credit card debt (even 0%) my affordability took a massive hit. A broker/specalist bank may well consider that it's 0%, but if you want the best normal deals, they are very likely to use a formula (e.g. deduct 36% of outstanding debt from your gross salary, or similar)

I think the checks are less strict for re-mortgages, particularly if you stay with the same lender.... and obviously the low LTV will be in your favour.

I do think your second idea is better (but clearly less profitable) - better to have NO savings and NO credit card debt just before remortage (as long as your files have updated to reflect that, pay the cards back a good month or two before application) - then you fall back to using the credit cards should you urgently need money over that short period. Then go back to stoozing after the funds have been advanced, to build your savings pot again.

A lot also depends on your income & dependants etc. You say we so I assume there are two adults. A sub-100k mortgage (assuming house prices don't crash) is a modest amount even if only 1 adult is working.

If you do the savings rather than stooze at the end (a few months before re-mortgage) I'd imagine it won't cause you any problems. In the meantime, you'd have at least reduced your mortgage interest a little, whatever happens regarding a BT card in the future.

Nebulous2 · 11 June 2018 at 7:24AM

It will depend a bit what your history is like with credit cards whether you get a prime card / high limit. £8k doesn't sound too ambitious.

Lenders generally allow you to switch to a new deal at the end of a fixed rate very readily (a phonecall or online application) switching to another lender is likely to require more effort.

If you've got a lot of debt it does hammer affordability. I had almost £30k at 0% and was asked to take it below £10k for a remortgage.

jasminum89 · 12 June 2018 at 5:24PM

You must check if you can overpay your mortgage without any consequences. For example my contract with bank says if I want to do it, I must got there and negotiate new rates. Otherwise I will lose money, not gain

[Deleted User] · 12 June 2018 at 6:18PM

jasminum89 wrote: »

You must check if you can overpay your mortgage without any consequences. For example my contract with bank says if I want to do it, I must got there and negotiate new rates. Otherwise I will lose money, not gain

No it doesn't, because you're just post building, aren't you?

sparkey1 · 28 July 2018 at 9:51PM

jasminum89 thats a very unusual term. Who is your mortgage with?

Most mortgages allow you to repay 10% per year, and the reason for that is banks have to be seen to be acting in your interests. I have never ever come across a mortgage where if you overpay you have to renegotiate the rate.

If you over pay the majority will

1 Either accept your overpayment, keep the term the same, and adjust your monthly payment down.

2 Some will keep your monthly repayments the same, so this in turn reduces the overall term as you have paid earlier, and hence you save on the interest.

3 Some will simply reduce your next payment by the amount paid for one month, and then revert back to original payment schedules. (for example Santander used to reduce your next installment by the amount paid, if the instalment was less than £500.)

Feedback wanted for my stoozing plan to overpay mortgage.

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