Using the Covid 19 payment holidays to pay off debt?

[Nickbrapp]

Currently have a mortgage fixed until June 2022 at 2.11%

Also have a credit card which is 0% with a £6000 balance that I’m paying back to be cleared in 3 years.

Is it worth me taking the 3 month payment holiday on my mortgage, Save the £2000 and then use that to pay off the credit card?

If I did this, by the time I come to move the balance of credit card would be £0, where as now it will be about £2,500

I am hoping to move in 12 months time, so I don’t mind the mortgage amount being higher at the end of it if having less credit card debt means I can borrow more as currently they calculate the monthly payment as 3% of the balance currently £180 which really does attack the amount the are willing to lend.

[anonymous-user]

Paying off 0% interest debt quicker doesn't feel to me as though it should be the top of the list

If you decide to, check the T&C of the mortgage holiday very carefully before you do this, particularly with a move in your mind. Missed mortgage payments (who really knows how they are going to be treated by underwriters in the end yet??) may well be more likely to affect a new mortgage application than a couple of grand that is wholly within terms on a CC

Are you spending less due to being in lockdown? If so, how much of a dent could you make in the CC balance with that?

[durbster]

You can work out the additional cost of taking a mortgage payment holiday here:
https://www.moneysupermarket.com/mortgages/search/...

If that helps you decided whether it's worth it or not.

[orangesrule]

This will cost you more. Your credit card is 0%, you will have more debt against your mortgage which there will be an interest charge on.

I also feel a mortgage holiday should be a last resort, you may well actually need to use it in months to come.

[chip*]

This mortgage "holiday" isnt a freebie. You may pay nothing for 3 months, but the deferred mortgage payments are capitalised onto your existing mortgage.

[dmahon]

So it would be paying off 0% interest, unsecured debt with higher interest secured debt over a longer period. Unless you need and it massively improves your cash flow I wouldn’t bother.

[Edible Roadkill]

That would cost you lots in the long run

[Sarnie]

Don't do it.

[Nickbrapp]

Yes but I only plan to have the mortgage in a short term, the end goal is borrowing more so I can by with my partner for a bigger place, my current mortgage is only £96k,


I know it’s interest free debt but it’s historical that I’ve been transferring and paying back for years now, and each time I transfer it’s between 2-4%