Buying a House on a Credit Card

Buying a house on a credit card may sound a ridiculous idea, but to some extent, this is what I ended up doing myself.

Actually what happened, is that in the process of buying a house my credit card debt went from 0 to £4,000 and this enable me to pay all the various extra costs associated with buying a house. I didn’t intend to buy a house on a credit card, but the extra £4,000 proved very useful in maintaining a reasonable cashflow during this expensive process.

Is it a good idea using credit card to buy a small part of a House?

It depends. In my situation it worked out OK. This was mainly because:

1. I borrowed at introductory rates of 0%. After 3 years I still have the same £4,000 debt. However, I just haven’t paid any interest on the debt. At the end of the introductory period I simply move the balance to another credit card. Therefore, it has been cheaper to borrow this £4,000 debt on a credit card than a mortgage.

2. It requires a good credit history. If you don’t have a good credit history it might not be possible to keep getting new credit cards every 6-9 months.

3. If you have a large credit card debt before you apply for a mortgage it will reduce the amount the bank is willing to lend as a mortgage.

4. It is risky if you are unable to switch the balance to a new lower rate. Because you could end up facing a rate of 17%

5. It is another monthly payment to make on top of you mortgage payment.

After 3 years I have been fortunate in that the house has increased in value. Therefore, I would be able to remortgage and get a bigger mortgage. This would enable me to pay off the credit card. However, as long as I can benefit from this balance being paid at 0% I shall continue to keep the debt on a credit card. I pay the monthly balance through direct debit to make sure I don’t miss any payments.