# Pay-Off My Credit Card or Over-Pay Mortgage?



## ahaydock (Jan 4, 2007)

Right I’m after some money advice here please: I have an Interest-Only Mortgage with the option to over-pay every month, to eat into the capital should I want to. My current Mortgage deal is on the SVR with C&G at 90% LTV – but had my property been valued £1 lower it would be at 95% LTV so as you can see it is very close. 

I also owe quite a bit on my Credit Cards as well.

As of next month I will have approximately £175 spare every month, and I am determined not to blow it but use it to clear some of this lingering debt and have considered the following:

1. Over pay on my mortgage every month, reduce the capital and lower the LTV? This way if I do want to go on to a deal I can get a better rate as with being so close to 95% LTV and house prices dropping I will need to be careful.

2. Clear my Credit Cards then start to overpay on my Mortgage?

3. Try to transfer my Credit Cards to 0% for say 6 months. Over pay on my Mortgage whilst this is at 0% and just pay the minimum payment, and when it returns to the normal rate then clear the cards?

4. Something else I haven’t considered?

All I would say is I am not a big risk taker so don’t want to gamble my money but want to see this debt come down.

Any thoughts or comments welcome.

TIA :thumb:


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## Vyker (Sep 17, 2008)

Options 3 please! 

If its a big credit card debt, then I would even start to stooze it on other cards.
Keep switching from one 0% deal to the next.

The worst thing you can do in this scenario though, is forget its there!
It will need to get paid off eventually!

HTH


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## carensuk (Aug 31, 2007)

Agree with the above:thumb:

Or buy somemore detailing gear


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## impster (May 2, 2007)

go to www.moneysavingexpert.com

lots of good advice there.


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## caledonia (Sep 13, 2008)

Option 3 here also done this 3 times now. and the extra interest saved on credit card can either go there too or to wards the mortgage


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## _daveR (Jun 3, 2008)

It has to be option 3, as long as you have the discipline to not spend more? 

95% mortgages just don't exist anymore. MrsR keep a good eye on these things as we are sat ready to buy once the market has sorted itself out. I'd want to get as much equity in the house as possible asap as you may find yourself unable to re-mortgage unless you have at least 10% equity now and this would mean a jump in rate once your current one expires (assuming you're on a fixed deal?)

You need to sit down and work out what the card costs you in interest really though. If you can clear it in a few months by making more sacrifices then do it. Clearing my card a good few years ago was the best thing I have ever done.


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## ikon66 (Jul 23, 2008)

the interest on the CC will be much higher than your mortgage, i would transfer to a 0% card then try to pay it off before the extra mortgage.

the poblems with keep moving CC to get the 0% interest is that each time you apply for a new card it flags up on your credit rating and could effect future loans or mortgages

imho


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## ahaydock (Jan 4, 2007)

Thanks guys- funnily enough my existing card lenders are always offering 0% so it is unlikely I will need to apply for a new card.

Only downside to this is it will attract a 3% charge every-time I do it.


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## mattsbmw (Jul 20, 2008)

The 3% charge is usually fairly insignificant compared to the interst you are saving


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## parish (Jun 29, 2006)

Option 3 here too - you're paying more interest on a CC than the same amount on a mortgage.

As suggested, keep swapping 0% balance transfer deals.

If you shop at Sainsburys, look at their 0% transfer - which I've just done. It's only for 10 months but you also get 0% for 12 months for spending on it at Sainsburys which can save you a little bit more. For example, my current account dips into the red as the month progresses, but by putting all my shopping on the CC and paying that amount off the bill on top of whatever I would pay off anyway results in slightly lower interest charges on my current account.


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## m500dpp (Feb 17, 2006)

beware if its MBNA they will offer you 0 then bump it up when you have no option, they are well known for it - get away from them if you can.....


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## ahaydock (Jan 4, 2007)

Thanks guys Option 3 is sounds like the way forward (which was my favourite as well).

Well I have Lloyds, Natwest and Virgin CC already


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## Avanti (Jan 17, 2006)

Get rid of the credit card debts as soon as possible, then over pay the mortgage as soon as possible after that! If you have an interest only, one day thecapital will have to be paid off, I have been over paying my mortgage for a few years not, it was due to finish in 2017 but at the current rate im going at, it will be finished in 3yrs and that was simply by holding the current payments everytime the interest rate dropped.


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## Bigpikle (May 21, 2007)

simple - pay off the most expensive debt first :thumb:

transfer anything you can to the 0% cards and see if you can get 0% deals from as many places as possible. *You dont actually need a balance to transfer at all *- I have had many many 0% balance transfers paid directly into my current account  Tell them its an overdraft you are paying off :thumb:

You might well be able to get 0% deals on a lot more than your CC debts, so you can then put this offsetting your mortgage or put it in a high rate savings account. Just remember to stash the money to pay the CC off ASAP after the deal expires. CC debt is always going to be more expensive than your mortgage, so get shot it paid off ASAP and then concentrate on the longer term plan of mortgage reduction.


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## Shiny (Apr 23, 2007)

From the little i know about mortgages, aren't credit card debts taken into account in affordability calculator anyway? So i guess it will be swings and roundabouts to a certain degree anyway.

Most lenders now want 80%, 85% max LTV, so that is something else to bear in mind.

As has been said, if it was me, i'd get a 0% deal for as long as possible (some do up to 15 months) consolidate all your cards on that deal, suffer the 3% transfer fee and pay off what you can as soon as you can.

Then when your card is clear, start to overpay on your mortgage safe in the knowledge you don't have a credit card bill to pay off in the back of your mind.


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## Gruffs (Dec 10, 2007)

Don't forget to cut the card up when you have transferred the money over. :thumb:


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## Schnorbitz (Aug 18, 2007)

Bigpikle said:


> simple - pay off the most expensive debt first :thumb:...
> ...CC debt is always going to be more expensive than your mortgage, so get shot it paid off ASAP and then concentrate on the longer term plan of mortgage reduction.


I agree :thumb: Keep it simple!


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## karl_liverpool (Sep 25, 2008)

continue to transfer credit card to 0 % apr, and pay it off, but not in one go. Pay up to the amount where your balance is the minimum payment. 

leave this last bit till a following month. then pay it off. this will avoid the extra fee for clearing the balance in one go, thus saving you more money to put towards your mortgage. 

this way, you're saving yourself loads in interest on the credit cards, and this will make life easier when you start to overpay your mortgage.


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## Paul-T (Nov 2, 2006)

Go to Vegas, stick it all on red. You only live once.




(If that doesn't appeal, for goodness sake get rid of the credit card debt before ANYTHING else).


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## The Detail Doctor (Feb 22, 2008)

Option 3, then cut up the card. It the best way....


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## GeeJay (Jun 10, 2007)

Option 3 is a good one, but it'll still be there. I'd be inclined to pay off the cards sooner, but then being so close to the 95% LTV border, it's a tricky one...
How about stick your CC balance on a 0% card, then instead of paying off minimum balance, pay off £100 a month, and whack the extra £75 into the mortgage if it'll help.

As afore mentioned, the CC will be the more expensive debt short term, and please remember that when 6 months on one card is up, you might find it extremely hard to find another card at 0%, so you can't rely on that fact. 

The key thing, however is discipline. Make sure that 'spare' cash goes somewhere useful :thumb:


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## Nickos (Apr 27, 2006)

pay off the cards i say. I could probably think of some good reasons but its too early atm!


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## clipstone (Nov 29, 2006)

Shine On said:


> Go to Vegas, stick it all on red. You only live once.


Best advice yet :thumb:


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## Mat430uk (Sep 17, 2007)

As an accountant I would say option 3 however when does your deal run out ? because chances are if your running 90 -95% you will only get a SVR mortgage after your deal runs out which may mean you may be better saving the money in the bank for the future because your payments may be higher depending what your deal now is


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## ahaydock (Jan 4, 2007)

Thanks guys for all the input - it is much appreciated :thumb:



Mat430uk said:


> As an accountant I would say option 3 however when does your deal run out ? because chances are if your running 90 -95% you will only get a SVR mortgage after your deal runs out which may mean you may be better saving the money in the bank for the future because your payments may be higher depending what your deal now is


I am not on any deal at the moment - just on the SVR - I have just fininshed a fixed rate, and on the C&G SVR following advise from 3 seperate IFAs :thumb:


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## Mat430uk (Sep 17, 2007)

ah right then over paying is a good idea, as well if your mortgage allows it if you over pay you will be entitled to payment holidays as well in the future should you need it. 

We have a deal at the minute for our office mortgage due to the new base rate its only 3.49% as its a tracker but i don't think we can over pay bugger !


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## Tricky Red (Mar 3, 2007)

Get off your SVR mortgage to something more stable and get a repayment mortgage. What is your current repayment vehicle for your mortgage? 

Transfer the balance of your cards to 0% for as long as you can and pay a regular amount each month to reduce the debt. 

Credit cards are the most expensive debt overall but your mortgage should 'now' be one of the cheapest. 

Don't forget about it, you will regret it.


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## ahaydock (Jan 4, 2007)

Thanks guys - really appreciate the input :thumb:


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## IVSPAUL (Dec 15, 2007)

get rid of those credit card debts asap and cut them up


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## Ross (Apr 25, 2007)

One thing ive lernt is never to get a credit card I just use a debit card so iam not spending money I dont have.


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## PDK (Apr 14, 2008)

RosswithaOCD said:


> One thing ive lernt is never to get a credit card I just use a debit card so iam not spending money I dont have.


Thats not correct mate, you can still over spend on a debit card - its called forced credit, and if transactions are delayed or presented late, you may well have spent those allocated funds.

Hope that make sense.


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## goldieandblacki (Aug 29, 2008)

Pay off your credit card 1st as this is always higher percentage than your morgauge.


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