Can I pay my mortgage with a credit card?

If you’re struggling to meet your mortgage payments, you may find yourself asking the above question.

house

And the answer is yes, technically you can make a mortgage payment with money from a credit card, but you probably shouldn’t.

Let’s take a look at why this is the case and then see what other options are available.

Risky business

When you applied for your mortgage, your lender will have carried out several checks to determine whether or not you would be able to afford the repayments. This will have included looking at your income, your other financial commitments and your credit history.

If they thought that you didn’t have enough spare income left each month to cover your mortgage payments, they’d probably have turned you down. They certainly wouldn’t accept your application if they believed the only way you could afford the repayments was to borrow more.

The thing is, because mortgages provide such large sums of money and are spread over such a long period, they tend to have the lowest interest rates compared with other types of credit.

So using a credit card, which probably has a higher interest rate, to pay for your mortgage doesn’t really make sense. You’ll pay more interest on the credit card payment than you would on your original mortgage payment, so you’ll end up having to repay more.

Cash advance

Your mortgage payments come out of your current account, most likely via Direct Debit. This means it comes out of your account each month automatically without you having to do anything. It’s highly unlikely a lender would ever allow you to set up a mortgage payment on your credit card.

To make the payment using your credit card you would have to withdraw cash using the card, which is known as a cash advance, and pay the money into your current account ready for the Direct Debit coming out.

However, you often have to pay a fee when you make a cash advance with your credit card, and you’ll have to pay interest on it too. Plus, using your credit card to withdraw cash shows up on your credit history – and it makes lenders extremely wary.

So, all in all, it really doesn’t make sense to pay your mortgage with your credit card.

No choice

If you’re considering using your credit card to pay your mortgage because you can’t otherwise afford the repayment, borrowing really isn’t the answer. If you’re in this situation, you should contact your mortgage provider as soon as possible.

Together, you may be able to work out a new repayment plan with your lender that means you pay less each month. This will probably mean extending your mortgage term, which could result in you paying more interest in the long run.

However, it will also make your repayments more affordable right now, which means your home isn’t at risk. And if, in the future, you’re able to pay more each month, you can speak to your lender about doing this.

Alternatively, you may be able to take a payment holiday for a few months. Because mortgage terms are so long, there’s always a risk that your financial circumstances will change at some point, perhaps because you’ve been made redundant or suffered an injury, and lenders understand this.

Many mortgage providers will let you take a break from your repayments for an agreed time while you sort out your finances – providing you let them know. The worst thing you can do is not let your lender know you’re struggling, because then they might think you’re simply evading your payments.

If you don’t work with your lenders to come up with a solution to your problem and simply stop paying your mortgage, they have the right to sell your home in order to get back what they’re owed. This is why it’s so important you speak to them.

You might also want to consider speaking with a money advisor about your situation. If you’re struggling with debt, there are solutions available that could help you. Don’t feel you have to struggle with the problem alone.

We hope this has answered the question of whether you can pay your mortgage with a credit card or not – and made it clear why you shouldn’t!

If you want information on how to deal with a problem debt, you can get free and impartial advice from the Money Advice Service.