Make Sense of Cards - move a LOB balance to my mortgage?

09. Sep 2010 at 15:16

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move a LOB balance to my mortgage? (Read 993 times)

saveapenny Newbies Offline Making Sense of Cards Posts: 3	move a LOB balance to my mortgage? 19. Nov 2008 at 19:16 Hi, I have a LOB card at 5.9% with about £8000 on it. With the recent drop in interest rates, my base rate tracking offset mortgage is now 4%. Am I right in thinking if I move it to the mortgage I will be saving interest at 1.9% or is that too simplistic and there is tax (basic rate) implications?
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clariman

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Re: move a LOB balance to my mortgage?
Reply #1 - 19. Nov 2008 at 22:40

Broadly speaking you are right but there are a couple of other things to think about i.e.

Moving your credit card debt to your mortgage means that you are turning an unsecured debt into one that is secured on your home i.e. if you have difficulty paying it, you potentially put your home at risk.
If you add it on to your mortgage and just pay off at your normal mortgage rate, then you are potentially turning a short term debt into a long term (e.g. 25 years) which will cost you more overall.

Personally, I think that 5.9% is a fairly healthy credit card interest rate, so I would be more inclined to try to pay it off quickly and get rid of it. Having said that, if mortgage rates drop by a further 1% (fairly likely) then a differential of 2.9% makes the mortgage route look a little more attractive.

Clariman

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saveapenny Newbies Offline Making Sense of Cards Posts: 3	Re: move a LOB balance to my mortgage? Reply #2 - 24. Nov 2008 at 19:07 Thanks. I have another card with £2000 on 0% that runs out in a month, so I assume moving that from 17.9% to the mortgage is equally as good? I intend to up the payments to what I would paid onto the card.
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saveapenny Newbies Offline Making Sense of Cards Posts: 3	Re: move a LOB balance to my mortgage? Reply #3 - 17. Feb 2009 at 19:21 Well my mortgage has now dropped to 2% ! So this has to be worth while now. The transfer calculator suggests I will save £876 in interest if I keep up my payments of £150 a month. Sounds like a good idea, I really should do this soon.
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