closing tag is in template navbar
timefactors watches



TZ-UK Fundraiser
Results 1 to 18 of 18

Thread: Mortgage / Credit Card Advice

  1. #1
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229

    Mortgage / Credit Card Advice

    Looking for a bit of advice on potential pitfalls in what I intend to do.

    We’re overpaying our mortgage quite heavily with a view to it being gone in the next 4 years. I appreciate it’s not something that makes perfect financial sense but it’s something I want to do.

    The mortgage is in 3 parts and the smallest (£12.5k) is out of its fix on 31.10.22. That bit is currently around £100 pcm and we overpay £840 pcm across all parts of the mortgage. We're at the point where we'll be penalised for the overpayments across the whole mortgage.

    I had intended to let that fall on to the SVR and then focus all overpayments on it because there won’t be any early repayment penalties once the fix has ended. It would then be repaid in around a year.

    The SVR is now 5.74% but I can get a money transfer credit card at 0% for over 12 months at a fee of 2.99%. I intend to take £12.5k on the credit card, pay off the mortgage and then repay the credit card over the next 13 months at £940 per month.

    All overpayments on the other bits of the mortgage would stop and then start again after 13 months.

    Any advice on this would be greatly appreciated. I can’t see any significant drawbacks but thought it prudent to check if anyone else can?

  2. #2
    Craftsman Linocut's Avatar
    Join Date
    Jun 2019
    Location
    north uk
    Posts
    681
    Will the amount that you’re paying 5.74% on reduce over the 13 months, so towards the end it may be 5.74% of a smaller and decreasing sum. The total may be less than a flat 3% of the principal.


    Sent from my iPhone using Tapatalk

  3. #3
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229
    Quote Originally Posted by Linocut View Post
    Will the amount that you’re paying 5.74% on reduce over the 13 months, so towards the end it may be 5.74% of a smaller and decreasing sum. The total may be less than a flat 3% of the principal.


    Sent from my iPhone using Tapatalk
    Good point, hadn't thought of that.

    On that basis, I guess it would work out about even and not be worth the hassle.

  4. #4
    Sorry to hijack your thread but what are peoples thoughts of this situation.

    £105k fixed until November 2023. 2.5%

    Option to change product and fix for 5 years available. £1.1k early repayment charge.

    New payment will be £96 more per month than currently paying.

    Obviously this is the best part of £2.5k more expensive in the short term but I’m spooked about what my rate could be in 14 months time if this madness continues.

    Would you sit tight or fix? If rates get up to 7% then I reckon over a 5 year period I could be as much as £6k better off over a 5 year period. I’m not 100% sure of my maths though.

  5. #5
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229
    Quote Originally Posted by johnny778 View Post
    Sorry to hijack your thread but what are peoples thoughts of this situation.

    £105k fixed until November 2023. 2.5%

    Option to change product and fix for 5 years available. £1.1k early repayment charge.

    New payment will be £96 more per month than currently paying.

    Obviously this is the best part of £2.5k more expensive in the short term but I’m spooked about what my rate could be in 14 months time if this madness continues.

    Would you sit tight or fix? If rates get up to 7% then I reckon over a 5 year period I could be as much as £6k better off over a 5 year period. I’m not 100% sure of my maths though.
    What's the rate on the 5 year fix?

  6. #6
    Quote Originally Posted by Troubled_Joe View Post
    Good point, hadn't thought of that.

    On that basis, I guess it would work out about even and not be worth the hassle.
    Yeah, credit card option will only save you about £75, though that assumes the SVR will stay at 5.74% for the next year???? Plus there's the risk you wont get a high enough credit limit on the card to borrow £12.5k anyway (they only usually let you take 80-90% of your limit), plus having a credit card balance over 70% of your limit puts a downer on your credit score.

  7. #7
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229
    Quote Originally Posted by Brighty View Post
    Yeah, credit card option will only save you about £75. Plus there's the risk you wont get a high enough credit limit on the card to borrow £12.5k anyway (they only usually let you take 80-90% of your limit), plus having a credit card balance over 70% of your limit puts a downer on your credit score
    Cheers, I realised that the gains would be quite small but it's definitely not worth it for £75.

  8. #8
    Quote Originally Posted by Troubled_Joe View Post
    What's the rate on the 5 year fix?
    3.9%

  9. #9
    Master
    Join Date
    Oct 2019
    Location
    Chelmsford, Essex
    Posts
    1,168
    Quote Originally Posted by johnny778 View Post
    3.9%
    Some lenders have been pulling fixed rate deals today as they reassess. No one can be sure what going to happen but I think a 5 year fix at 3.9% could look very good soon with rates going higher

  10. #10
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229
    Quote Originally Posted by johnny778 View Post
    3.9%
    I'd definitely be tempted by that. Definite short term loss followed by medium term gain. It's years 3-5 that are the gamble, I reckon.

  11. #11
    Grand Master wileeeeeey's Avatar
    Join Date
    Jan 2017
    Location
    N/A
    Posts
    18,997
    I know a couple who are finishing their mortgage in the next 12 months. About 24 months ago both the husband and wife took out multiple 0% fee-free bank transfer cards they could and signed into a 2 year fix.

    This allowed them to nearly half the mortgage borrowing so half the interest. No downside for them so far just some initial admin with the different cards and getting them all to have roughly the same DD date. They're still overpaying up to 10% on the mortgage balance too.

    I would do the same if I could.

  12. #12
    Master Christian's Avatar
    Join Date
    Dec 2008
    Location
    London
    Posts
    9,876
    I remember when we entered the era of extremely low base rate back in about 2008. I'd just taken out my first mortgage a few months before the financial crash. I was trying to find out the rate I was on but can't find it in my old emails.

    One thing I can't remember...were interest-free credit cards and shopping a thing back then? If not, wondering whether they will be around much longer.

  13. #13
    Quote Originally Posted by Christian View Post
    I remember when we entered the era of extremely low base rate back in about 2008. I'd just taken out my first mortgage a few months before the financial crash. I was trying to find out the rate I was on but can't find it in my old emails.

    One thing I can't remember...were interest-free credit cards and shopping a thing back then? If not, wondering whether they will be around much longer.
    They were definitely around back then, zero fee back then too. Around 2003-2008 i used to partake in an activity called 'stoozing', making cash from 0% 0 fee credit cards. Had £40k on interest free cards with the cash sat in a high interest account earning 5%. Was a nice little earner for me at the time. Once the 3-4% fees came in, i stopped.

  14. #14
    Master
    Join Date
    Jan 2018
    Location
    UK
    Posts
    3,194
    Quote Originally Posted by Brighty View Post
    They were definitely around back then, zero fee back then too. Around 2003-2008 i used to partake in an activity called 'stoozing', making cash from 0% 0 fee credit cards. Had £40k on interest free cards with the cash sat in a high interest account earning 5%. Was a nice little earner for me at the time. Once the 3-4% fees came in, i stopped.
    Yes, I think this was common, I heard about this before.

    I guess they rely on people spending the money and then getting stung by the follow on rates. The % fees they now charge are slightly annoying, but there are some out there that don't (usually only for balance transfers or purchases).

  15. #15
    Grand Master wileeeeeey's Avatar
    Join Date
    Jan 2017
    Location
    N/A
    Posts
    18,997
    Some people still stooze by putting all of their work and personal expenses on 0% cards and banking as much of their salary in savings accs as possible. Seems like too much imo but 40k in 5% was a no brained.

  16. #16
    Master Christian's Avatar
    Join Date
    Dec 2008
    Location
    London
    Posts
    9,876
    Quote Originally Posted by Brighty View Post
    They were definitely around back then, zero fee back then too. Around 2003-2008 i used to partake in an activity called 'stoozing', making cash from 0% 0 fee credit cards. Had £40k on interest free cards with the cash sat in a high interest account earning 5%. Was a nice little earner for me at the time. Once the 3-4% fees came in, i stopped.
    Ah thanks.

    Back in 2007 at the time of my first mortgage, I'm pretty sure I was borrowing on 6%, which seems eye-watering now. My mortgage is currently over double what I originally borrowed for my first house and I don't pay much more in monthly payments. How we got used to low base rates!

  17. #17
    Also OP, are you sure that your mortgage provider will accept payment via a credit card? I'm sure i read something in the past that you could pay your mortgage using one

    Might be worth checking before you commit

    John

  18. #18
    Journeyman
    Join Date
    Oct 2015
    Location
    Lancashire, UK
    Posts
    229
    Quote Originally Posted by johnboy9876 View Post
    Also OP, are you sure that your mortgage provider will accept payment via a credit card? I'm sure i read something in the past that you could pay your mortgage using one

    Might be worth checking before you commit

    John
    Thanks, but it's a specific cash transfer card that I'd have applied for. They just pay the requested amount to your bank account.

    The kind used for the stoozing referred to above. Not many about these days though.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  

Do Not Sell My Personal Information