Can you pay for a house using a credit card?!

[threeleftfeet]

This is less bonkers than it sounds, honest!

I bought my London flat over 10 years ago.
We're selling up now, and I reckon we can afford to buy a small house in our new town, using the equity from the London flat, so we'll be mortgage free. (I do appreciate this is a very lucky position to be in).

Neither myself nor DP are in a position where we will be given any new credit at all (because we're students as we're retraining, not because of dodgy credit history I hasten to add!)

I do however have existing credit cards which i keep for emergency, and I think I am about £4K off the credit limit.

Could I use this towards an offer for the new house? How would I actually get the money out of the credit card and to the seller?! (Sorry if a stupid question but I use the card rarely, and when I do it's in shops or online).

I know it's not a great idea to get in debt, but seeing as we won't have a mortgage to pay off I don't see why not?

Any advice would be much appreciated.

[MissPollysTrolleyed]

That should be fine. Your solicitors should be able to take the payment by credit card over the phone and they will then transfer it to the buyers on exchange / completion of your purchase. Some solicitors don't accept credit cards but most do nowadays although they may charge a transaction fee.

[bosch]

Wouldn't it make more sense to have a tiny mortgage? You could ask your lender if you could pay off all bar £4K with the money from the sale and then work out how quickly you could pay it off (without incurring any penalty?) Interest on your credit cards must be way more than on your mortgage? (I don't have a credit card so can't answer your question... sorry)

[threeleftfeet]

It might make more sense to have a tiny mortgage, if you know anyone giving mortgages to students with no income, please let me know! I don't think they'll touch us with a barge poll! Might be worth speaking to my current mortgage lender as I've never missed a payment I suppose, but I suspect it's a long shot!

MissPollysTrolleyed thanks, that's useful, I'll speak to the solicitors about whether we can do this before we choose one.

[RedBlanket]

Depends on how long you think it will take you to pay I back. Interest on a cc will e loads more than a mortgage
But if you can pay it back in a shortish period of time say over 6 months then it may be cheaper and less hassle than setting up a mortgage.

DH has a cc which is interest fee for 18 months on new spending. That could be even cheaper again, so long as you pay it of at the end.

[MissPollysTrolleyed]

I agree with Red Blanket. Mortgage companies require you to jump through all sorts of hoops including having expensive valuations and solicitors reports done irrespective of the loan to value ratio.

If you are certain that you can pay it off quickly, the credit card is a neater, quicker solution but you say you have no income so can you be certain that you will be able to pay it off in sufficient time before racking up punitive charges and a bad credit score?

[bosch]

Ah, good point about interest free cc, didn't think about that!

[threeleftfeet]

I'll have an income fairly soon (all going to plan!) and we also intend to take in a lodger (a particular friend we've lived with before) if we can afford a 3 bed (and this 4K might actually make the difference!) so I'm confident we can pay it back.

[everythingtodo]

Can you borrow the money from either set of parents and then set up a standing order to repay them so it is a short term loan - much simpler.

[threeleftfeet]

Good to think around the problem, thanks, but no, it's not an option.

[HappyCamel]

Cash advances on credit cards are charged at around 20% so very very expensive. Also any repayments will go to standard purchases first so youd have to clear the whole debt to stop the high interest. Avoid it if you can.

[HappyCamel]

Can you get a student loan or student overdraft?

[threeleftfeet]

Would it be counted as a cash advance if I paid it to the Solicitors, or would it be seen as a payment? I'm guessing it's a cash advance, but just checking!

Got max student overdraft already and actually living off the loan!

FWIW it's a well-paid industry, growing industry (despite current climate) that I'm going into, I do plan to pay all this off!

[threeleftfeet]

If giving the money to the estate agents is a cash advance, then what about the estate agent's fees?

We have to pay fees on the flat we're selling. I'd assumed they'd simply come out of the equity, but if they'd take their fee as a CC payment then I could release this form the equity instead, and avoid cash-advance fees this way perhaps?

Worth asking when we choose an agent too I guess (which will be very soon!)

[threeleftfeet]

"Also any repayments will go to standard purchases first so youd have to clear the whole debt to stop the high interest. Avoid it if you can."

I didn't know that - very useful info thanks.

[threeleftfeet]

So to save money for the new house, should I be putting as much as possible on the CC now?

e.g. we need to re-carpet flat before putting on sale. I had planned to pay cash, reckon we should pay on the card and put the cash towards the new house then.

[threeleftfeet]

We don't plan to spend much more on doing our flat up. Most of the work (plastering, decorating etc) has been done already, all that's left now is a new carpet and smartening up the tiny garden.

We own a van so don't plan to pay any removal costs.

However if the agents will take a CC payment for the fees, that would make all the difference, I'll definitely be asking that question when we're picking one.

[threeleftfeet]

And getting the card out for any other incidental costs from now on!

[threeleftfeet]

"Keep as much of your savings for contingencies." that's my plan from now on!

[threeleftfeet]

If the solicitor takes a CC payment as a fee but actually uses it as cash for the buyer, is this OK, or is it dodgy ground?

Just want to check - as if it's strictly illegal I don't want to embarrass myself by asking them if they do it!

Although on the other hand perhaps I should and if they do run a mile! (I'd rather not have a bent solicitor!!)

[MissPollysTrolleyed]

I don't think they could do that threeleftfeet. They have strict audit controls.

[myron]

I would sell up first, bank your dosh and rent for a short period in your new location. This is a great solution - avoids this problem completely and you'll be a chain free cash buyer which is definitely worth a 6 mth rental.

[threeleftfeet]

MissPollysTrolleyed I thought so! Just checking!

[threeleftfeet]

myron we're actually renting already in the new area (have been for 2 years).

I'm desperate to get into our own place now!

But feelings aside, I don't understand how depleting our money by renting for another 6 months will be any help?

And anyway in the current climate I'd rather have my money in bricks and mortar than a bank.

And what if prices in our new town buck the trend and go up faster than bank interest? (This isn't impossible!)

Am I missing something somewhere?

[threeleftfeet]

Oh I see what you mean about being a cash free no-chain. As soon as the flat sells we'll be in that position anyway.

If we get a decent offer we won't wait to find a place here, we will bank it, but I'm hoping for a matter of weeks not months!