Can I pay my mortgage with a credit card?

Can I pay my mortgage using a credit card in Australia?

Most home loan lenders will not accept mortgage repayments directly from a credit card. In general, lenders like to see loan repayments made from your everyday account, a linked offset account, or another transaction account with a different bank.

There are exceptions to every rule, however, so you may want to ask your lender about the possibility of making loan repayments with a credit card. If your bank doesn’t allow this, there can still be other indirect ways to pay a mortgage using a credit card.

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How is it possible to pay your mortgage with a credit card?

One possibility is to use a third-party service such as a bill-paying app. Apps such as Easy Bill Pay let you identify the bills you want to pay (including your mortgage) via your preferred payment method (in this case, your credit card) for the payments to be made automatically.

Another option to pay a mortgage with a credit card involves a little more effort. You could potentially withdraw funds from your credit card using a cash advance, and use the money to make a home loan repayment. This strategy relies on cash advances being available on your credit card and not all cards allow cash advances. This is a costly option that is not typically recommended.

Below, we outline the risks associated with paying your mortgage with your credit card.

The risks of paying a mortgage with a credit card

If you’re thinking about paying your mortgage with a credit card, it’s important to be aware of the possible drawbacks:

You could pay cash advance interest rates (and extra fees). A payment to your home loan from a credit card may be treated as a cash advance. The catch with this is that cash advances don’t usually come with interest-free days and interest will likely be charged from the time you withdraw cash. Cash advances also often have a higher interest rate than standard purchases. You will likely be asked to pay a cash advance fee, often based on a percentage of the cash withdrawn. Not all cards come with cash advance fees.

You may be charged third-party fees. If you use a bill paying app to make mortgage repayments with a credit card, chances are you are looking at a separate layer of fees levied by the platform. Easy Bill Pay for instance charges a monthly service fee of $24.95. Additional fees may also apply for credit card top-ups or for high value transactions.

Your personal debt could start to spiral. When you use a credit card to make home loan repayments you’re essentially paying down a very low-interest debt (your home loan) with what can be a high-rate debt (an outstanding credit card balance). Unless you are diligent about staying on top of the card balance, you could find that the growing card debt becomes hard to manage. Worst case scenario, this could jeopardise your ability to keep up with your mortgage repayments.

Should you pay your mortgage with a credit card?

Typically, paying your mortgage with a credit card is not recommended as the interest and third-party fees you could be charged could easily offset any benefit received. If you’re thinking about paying a mortgage with a credit card because you are struggling to keep up with your home loan repayments, it can be worth talking to your lender to renegotiate your interest rate and/or repayment amount. This may allow you to maintain your loan repayments in a way that suits your budget while keeping your credit card for regular purchases.

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