Can You Pay Mortgage Deposit With A Credit Card?

[[TW]Fox]

the op is stating that they CAN afford it.

They may well state that but it doesn't make it right. Does somebody who needs to pay the deposit on a credit card strike you as someone with the spare capital to be safe in property purchase?

Sounds like they are very tight finances wise - quite dangerous with the current climate.

 

[Haircut]

IF you can find a property that is less per month than the equivalent cost to purchase a place, then great. However, this is apparently becoming harder to do, I am sure I read recently that rental prices are going up. I know that the house we are in (and leave in a month) the price will be going up either £25 or £50 a month (not much, but it makes a difference where we are).

I think in most areas a mortgage would cost significantly more than the rent on an equivalent place.

There are two flats in the same block near me, obviously I don't know the internal state of them but one is for rent at £1000 pcm and the other is for sale at £280K.
Assuming a 90% mortgage that would be somewhere around £1600-1700 per month for the mortgage. Plus you would be losing interest on around £30K of deposit too.

That's not something I'd particularly want to be doing in the current climate.

 

[Morba]

They may well state that but it doesn't make it right. Does somebody who needs to pay the deposit on a credit card strike you as someone with the spare capital to be safe in property purchase?

Sounds like they are very tight finances wise - quite dangerous with the current climate.

I agree with you, personally it would be a case of wait 2 months wages (im guessing that would cover it for them) then do it, leaving the credit where it is until really needed (which would likely to be soon).

 

[ScarySquirrel]

This has probably been answered but I cannot be bothered to read the thread. Surely you can just do a balance transfer from a credit card to your current account and then use that cash?

 

[Reality Bites]

pretty sure you can't legally pay for credit with credit... from memory you have to actually transfer the deposit cash by wire/cheque.

You would have to go with a lower % deposit (if they'd give you the mortgage with one) or borrow more to cover the associated fees (i'm sure some places offered us this... although again you may have a hard time finding somewhere in the current climate)

When i got my mortgage they demanded a 10% deposit when i only had the cash for 5%. They would however give me a loan to pay the deposit. Is that not similar to paying with a card?

I know technically the funds would be coming from my bank so not directly credit, but if it was illegal, surely the bank couldn't recommend it as an option?

 

[Burnsy2023]

On a related matter, I feel completely vindicated that the market is now crashing. I told you all in November last year this would happen, and again at the start of this year and too many of you were happy to shout me down.

How do you like those apples?

I'd just like to point out that there is not enough evidence to say that the housing market is crashing. It's decresing fast, but considering the rate that it's grown over the last 6 years or so, it's very difficult to say how long it'll last for.

Come back in a year or two and gloat

Burnsy

 

[AtreuS]

With all the media harking on about a coming Recession and house prices dropping slowly just make sure you think this through very VERY carefully.

Are you both in secure jobs? if a recession did come are you employed in the sort of sectors that will be hit hard/fast such as the entertainment or service industries?

If one of you lost your job would you be able to pay your new mortgage for 2 or 3 months should it be hard to find new work?

Do you have robust enough finances to cope with an interest hike when your fixed rate runs out?

Lots to think about BUT as you say its a comparatively cheap house and if its in as good condition as you say then its not going to drop massively should a crash occur. If a crash does occur does this house fit the conditions you and your family need to stay there for maybe 5-10 years and ride it back out to the top of the market?

Consider all these things and be realistic. You do not want to end up in negative equity, unemployed and on the edge when your fixed term runs out and the lenders are not willing to give you a new fixed term mortgage.

Just because you can afford it now does not mean you can afford it in 5 years time. Thats the gamble you have to take when buying property. During the "boom" years things looked all rosy but now its very uncertain and you have to be extra cautious.

Good luck.

 

[Dolph]

I'd just like to point out that there is not enough evidence to say that the housing market is crashing. It's decresing fast, but considering the rate that it's grown over the last 6 years or so, it's very difficult to say how long it'll last for.

Come back in a year or two and gloat

Burnsy

What he also forgot to mention is how many years he's been saying it for, and therefore how many times he's been wrong...

I was told by many people on this forum I was stupid to buy a house in 2005, because the market was going to crash a fortnight later and I'd be destitute.... instead I have a nice cushion built up and a good ongoing mortgage deal...

 

[[TW]Fox]

I was told by many people on this forum I was stupid to buy a house in 2005, because the market was going to crash a fortnight later and I'd be destitute.... instead I have a nice cushion built up and a good ongoing mortgage deal...

Do you predict your house will be worth more than you paid for it in 3 years time?

 

[Jonnycoupe]

£74k and fixed the mortgage for as long as possible? What could go that wrong?

I pay double a mortgage of that just on rent.

 

[Dolph]

Do you predict your house will be worth more than you paid for it in 3 years time?

I don't know, but we have enough space to not have to move, and enough reserves to not have to move.

Mainly because we bought on the basis of stagnation or drop in prices, rather than rising prices, it's a house to live in, not a house to make money on, and works on that basis.

Anyone buying to make money now is foolish in the extreme, but if you're buying somewhere to live for an extended period, and you get a good mortgage deal, it's not going to matter.

 

[clv101]

Do you predict your house will be worth more than you paid for it in 3 years time?

Dolph's situation may of course vary... but on average people who bought a house in 2005 will be now pretty much breaking even (economically) after fees/stamp duty is taken into account. Of course it's hard to know in this market what the place would actually move for so it's quite possible that if someone who bought in 2005 had to sell in 2008 - they've now lost money.

Given that over the last three years it's been quite possible to rent for less than the interest would have been on the equivalent mortgage, and therefore save more (plus interest) than the capital that would have been paid back, buying from 2005 onwards has been a bad move - economically.

 

[Dolph]

Dolph's situation may of course vary... but on average people who bought a house in 2005 will be now pretty much breaking even (economically) after fees/stamp duty is taken into account. Of course it's hard to know in this market what the place would actually move for so it's quite possible that if someone who bought in 2005 had to sell in 2008 - they've now lost money.

To balance it out, it is also certainly possible that someone who bought in 2005 and had to sell now has made money (the houses round ours are still selling for a fair bit more than we paid for ours, nearly 25% more in fact), it's swings and roundabouts and another reason why trying to apply averages to specifics is problematic. It would have been very easy to work yourself into real trouble, plenty of people who bought flats at this time, or who bought somewhere that they would have to sell within a few years, or they got a short term good deal on a mortgage that they now can't renew, for example. But if you were careful to avoid these pitfalls, you aren't at anything like the economic risk those at the other end of the market are.

Given that over the last three years it's been quite possible to rent for less than the interest would have been on the equivalent mortgage, and therefore save more (plus interest) than the capital that would have been paid back, buying from 2005 onwards has been a bad move - economically.

But, as has been said many times over, it's not just about economics, unless you're trying to make money from the housing market.