Pay mortgage using a 0% credit card

hugheskevi wrote: »

The 0% credit balances are spread across 9 cards at the moment - that is typical, although the number varies over time. The average credit limit is about £9,000 but is quite variable, ranging from £3,000 to £18,000. It can be frustrating to be offered a low limit, as by then you have the application on credit file so may as well take it, so I focus attention on lenders with a reputation for giving larger limits.

Due to being spread over a number of cards, they all mature at different times. It is undesirable for a high amount of credit to all mature at one time as then you need to keep back a big chunk of capital to meet the potential repayment demand if you don't get another offer, but it often happens that way as I usually go through 2 or 3 rounds of applications each year and the offers are often for 12, 15 or 21 months so the longer offers can sometimes inadvertently coincide with shorter offers.

One thing to note is that once you have large amounts of credit available, lenders may be reluctant to offer more, or if they do it isn't much. That might require repayment of some cards as they fall due and then later rebuilding the amount borrowed by taking out more offers. Obviously that isn't an ideal set of timings. My outstanding credit card debt typically ranges between about £50-£80K.

As there are a large number of cards to meet monthly repayments on, plus a reasonable sized amount of capital held to meet potential demand, I also have quite a few banks accounts to take advantage of interest and other rewards from the bank accounts, paying the credit cards from those accounts to meet direct debit requirements.

The £50K is not needed as security against not getting more offers, as I can rely on the £21,818 plus future income to meet credit card repayments if necessary. So the £50K can be used for anything. If used for a pension it is out of the picture as it cannot be accessed. If used to reduce mortgage it is then unavailable for anything else but has reduced the mortgage balance. If used for ISA it is then available if required, providing another buffer if everything else goes wrong.

As credit cards are paid down I am constantly replacing them with new offers, updating the cashflows, and releasing money for investment/mortgage repayment such that I can always pay off the credit cards from cash savings plus income if necessary.

Think of the strategy not so much as using 0% credit cards to pay down a mortgage, rather that it is using 0% credit cards to costlessly borrow against future income to enable you to pay down mortgage now.

There is going to come a time in the next few years where I have invested as much into pensions as I want, my mortgage is paid off and I can make full ISA contributions each year for my wife and I. At that point I'll start winding down the 0% cards as I'll have limited use for extra money.