Can you pay your mortgage with a credit card?
The short answer to this question is probably. It would depend on your lender’s policies, but there’s a least a decent chance that they can accept credit card payments. As the old saying goes, however, just because you can, it doesn’t mean that you should. Here are some reasons why you might not want to.
You’re probably going to find it a bit of hassle
This may sound a bit of a weak reason, but it’s worth mentioning. You could find yourself having to spend quite some time waiting in a queue to make a payment by phone. Depending on your lender’s number and your phone package, this could work out expensive.
You could end up hitting your credit limit very quickly
Mortgage payments tend to be fairly major commitments, which means that for most people, it’s probably only going to take a few of them for you to hit your credit limit (assuming you just make your minimum payments).
You could be surcharged
In principle, you could be surcharged for paying with a debit card, but in practice it’s much more likely with a credit card due to the higher processing fees involved.
You could wind up paying a lot of interest
The interest rates on credit cards tend to be massively higher than the interest rates on mortgages (and if you are surcharged, the interest will be added to the surcharge as well).
Why might you want to pay your mortgage with a credit card
It’s a bit cheeky, but if your credit card lender is offering a really good deal linked to a minimum spend, then you might want to use your credit card for everything you possibly can and pay it off immediately. This might not work if your mortgage lender implements a surcharge. You’d have to do your sums.
Alternatively, if you have a very short-term cash-flow problem, then you might want to use your credit card to pay your mortgage to avoid taking a hit to your credit record for what is just a short-term issue, which you are confident you can address.
Alternatives to paying your mortgage with a credit card
First of all, it’s always best to avoid getting into a situation where you might struggle to pay your mortgage each month. This may sound like stating the obvious, but it’s often much easier to take preventative action (even if it involves making some sacrifices to find the money to fund them) than it is to deal with a situation which circumstances have forced upon you and for which you are not prepared. Ways you can prepare for temporary cash-flow issues include:
Having cash savings, the amount you will need will depend on your situation but ideally, you will want to have at least 6 months worth of living expenses set aside.
Have insurance, income protection insurance and critical-illness cover might help to cover loss of income.
Ideally, you will want them in place when everything is still going fairly smoothly as policies are unlikely to pay out for issues which arose before you bought them.
Other possibilities
The previous suggestions are all under your control. You can also try asking your mortgage lender for a payment holiday or to switch to an interest-only mortgage for a limited period. You could think about letting out a room in your home (if your lender permits it). You could even look at downsizing
Alternatively, you could try looking at ways to reduce your other expenses and/or increase your income to be able to afford the payments.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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