As economic conditions become more challenging, many home owners are looking for new ways to stay up to date with regular loan repayment requirements.
Can you pay your mortgage with a credit card? It depends on your loan, your lender, and your unique financial situation. If you are able to pay your mortgage this way, there are a few things you should be aware of so that you can minimise financial risk going forward.
Here’s what you need to know about credit card mortgage repayments, including other options and support you may be able to access.
Paying your mortgage with a credit card
Most lenders have clear systems in place that control how borrowers are able to make loan repayments. Often, this may mean that you are not able to make repayments using a credit card.
Some lenders might be more flexible with their policies. This could mean that you are able to pay your mortgage directly from a credit account or that you are able to transfer from your credit card to pay your loan from your transaction or offset account.
If you’re unsure what the rules are with your lender, it’s best to get in touch and ask. A customer service representative can guide you towards the best pathway.
Risks associated with credit card payments
If you are able to proceed with a credit card mortgage payment, there may be risks involved.
Paying your mortgage by credit card could mean that you are charged a much higher rate of interest, leading to further financial challenges. As your mortgage payment is unlikely to be considered a purchase, it probably won’t be eligible for an interest-free period during which you can clear your balance.
If you put multiple mortgage payments on your credit card, you may also be at risk of quickly maxing out your credit limit. This could lead your debt to worsen, and you could even be faced with additional third-party fees.
Alternative options to consider
If you can, it’s usually best to avoid using your credit card to pay for your mortgage. There are several alternative options you can consider.
Instead of paying your mortgage with your credit card during low-income periods, you may be able to contact your lender to pause or temporarily defer your loan repayments. This may also lead to higher interest charges, but it could give you the time you need to get your finances back on track.
You might also be able to refinance your mortgage with a new lender. This gives you the chance to explore other loan packages that could offer you a more competitive, and more affordable, rate.
Getting help from the experts
If you’re in a position where you need to consider using a credit card to pay for your mortgage, you may need to review your finances and put a better plan in place.
Working with a skilled and experienced broker can help you navigate your mortgage confidently and identify the best way forward if you’re struggling. Contact the team at Our Top 10 to find the best mortgage broker Sydney has to offer.