Credit cards Updated:
Figures from Shelter revealed that over a million householders have used their credit card to make their mortgage payments or rent over the last twelve months.
Moneyfacts.co.uk urges borrowers to think carefully before going down this road, as it's one of the most expensive solutions you could choose. If you foresee a problem meeting your mortgage payments, or as soon as you experience any difficulties, speak with your mortgage company immediately.
If it's a short-term cash shortage, or a longer-term affordability issue, your lender will do their best to offer advice and financial support. It's in both yours and the lenders interest to make sure you continue to meet your repayments.
Borrowing to pay your mortgage on your credit card is a dangerous trap. Take the example of an £130K mortgage over 25 years charged at 5.5%. Putting just one months mortgage payment of £740 on an average credit card and making only the minimum payments to the card could see this debt stay with you for 19 years and 10 months, incurring £1359.97 in interest.
The average cash rate today is 23.54%, but can stretch as high as 46.19%. And you must remember that any cash advance will incur interest from day one, so even if you pay off your balance in full the following month you will still face an interest bill.
If you do find your mortgage payments a struggle, the first step you should take is to undertake a full review of your finances – our article on Get Out of Debt - Top Ten Tips and use our budget planner is a good place to start.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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