Are you looking for a way to increase your credit spending and meet the sign-up bonus your new credit card issuer has offered? Or, perhaps your mortgage is due and you won’t get paid in time to pay it in full. Either way, you’re exploring your options. You’re asking, “Can I pay my mortgage with a credit card?”
In short, the answer is ‘yes.’ However, your lender isn’t going to make it easy for you. So, let’s explore some of your options for paying a mortgage with a credit card.
We’ll look at the advantages and disadvantages of each option. After that, we’ll explore solutions to some of the problems that might arise so you can make an educated decision about whether or not to take this route.
First, Why Would You Want to Pay Your Mortgage with Your Credit? Isn’t This a Bad Idea?
In most cases, paying on any kind of loan with a credit card is a money-suck. Most credit cards’ annual interest rates run around 25%. Why would you pay that when you don’t have to?
Plus, using a credit card rather than a check or ACH transfer to your lender requires more steps. Mortgage lenders do not traditionally accept credit cards as a payment option, so you have to find workarounds.
However, there are some situations when you would want to use a credit card to pay your mortgage.
- Your property is facing foreclosure by your lender because of missed payments on your mortgage, and a credit card is your only funding option.
- You’re temporarily low on cash and want to avoid a late payment fee that is higher than the interest you would pay by using a credit card.
- You want to hang onto your cash because it’s accruing more interest in an investment fund than you would pay in credit card transaction fees for the cost of your mortgage (this is remarkably rare).
- You need to spend more in order to meet the sign-up bonus on your new credit card to collect points or other rewards.
Unless you plan to pay the card down right away or you’re in a 0% APR introductory period, be wary. Using your credit card to pay your mortgage can come at a cost. But, if leveraged properly, you can come out ahead.
2 Systems to Pay a Mortgage with a Credit Card
We’ve looked at methods to pay rent with a credit card. There, we explored ways to get your credit card balance to your property manager for rent payment. Rent is a bit simpler because there are platforms created just for property managers to help renters build credit (usually, before they are ready to buy homes).
Now, what are the systems you can leverage to pay your mortgage on a credit card?
- Take a cash advance from your card issuer and use it to pay your mortgage.
- Use an online payment system to pay your mortgage with a credit card.
Each method comes at a cost, so make sure you understand the advantages of each method before you proceed.
The Pros & Cons of a Credit Card Cash Advance to Pay a Mortgage
A cash advance on a credit card is quick, convenient, and simple. All you need to do is contact your credit card issuer and request the advance. If you have a pin set up, you can simply withdraw funds from an ATM. So, you can access your funds immediately.
Credit Card Cash Advance Advantages Summary:
- Immediate access to funds
- Convenient request methods
But, a credit card cash advance comes at a significant cost. According to CreditCards.com, average transaction fees for a cash advance are 5% and the average APR is 25%. Plus, APR will start to accrue instantly. These costs in addition to ATM fees are pretty hefty.
For a $1,000 mortgage payment, you’ll pay $1,050 plus ATM fees immediately. And, for a $2,500 mortgage payment, it will cost $2,625 plus ATM fees upfront. Then, if you don’t pay your card off immediately, interest will pile up. So, if you take out a cash advance, you’ll pay more than necessary to access your funds.
Furthermore, a cash advance will not count toward spending to earn introductory points or rewards from your card issuer. So, if your reasoning for paying your mortgage with a credit card is to earn bonus points on your card, this isn’t the way to do it.
Credit Card Cash Advance Disadvantages Summary:
- Average transaction fees of 5%
- Average instantly-accruing interest of 25%
- Unnecessarily high costs
- No credit card bonus points or rewards earned
The Pros & Cons of an Online Payment System to Pay a Mortgage
An online payment service like Plastiq will enable you to pay your mortgage with a credit card. Currently, the average transaction fee for using their service is 2.5%, about half the cost of a cash advance. So, the cost of one of these systems is low.
Be sure to double-check the fees for each online payment service before you opt to use one of them as the terms and conditions are subject to change at any time.
In addition, you can use most major credit cards to pay nearly any bill. For added convenience, Plastiq accepts major credit cards for mortgage payments. Currently, this includes MasterCard, Discover, JCB, and Diners Club credit cards.
Furthermore, you don’t have to get pre-approval from your lender. Plastiq will send them an ACH transfer, direct deposit, or a check on your behalf in exchange for a small percentage of the transaction. Pay one-time, manually as needed, or set up automatic payments. This option gives you a ton of freedom.
Online Payment Service Advantages Summary:
- Low transaction fees (2.5%)
- Can conveniently pay multiple bills that do not accept credit card payments
- Use MasterCard, Discover, JCB, and Diners Club credit cards to pay mortgage
- Experience freedom in your options
But, because of restrictions in place by the credit card companies, you cannot use Visa or American Express cards to pay a mortgage with Plastiq (though, you can pay other bills with these cards). So, if you’re looking to boost the points on one of these cards, think again — they just don’t allow it.
And, you have to consider the cost. Is 2.5% of your mortgage payment transaction actually worth the bonus points you will receive? The answer to this will depend on your credit card and rewards program.
Online Payment Service Disadvantages Summary:
- You can not use Visa or American Express credit cards to pay your mortgage, under any circumstances.
- The cost of transaction fees may not outweigh the number of bonus points that you can earn.
Can you use a credit card to pay your mortgage?
Yes. With certain online payment services, you can convert credit card funds into check, wire transfer, or ACH transfer funds to pay your mortgage, but there are stipulations. For example, there will always be a transaction fee.
Can you buy a house on a credit card?
Yes. You can use online payment services to convert your credit into check, wire transfer, or ACH transfer to buy a house. But, again, there are stipulations.
Do real estate agents accept credit cards?
Yes. Like any other independent service providers, real estate agents can enable their clients to make payments with a credit card. However, not all real estate agents will accept credit. It is the decision of each agent to accept cards or not.
Can you pay closing costs with a credit card?
Technically, yes. You can use certain online payment services to convert your credit into a check, wire transfer, or ACH transfer to pay the closing costs on a mortgage. But, as with other non-traditional payments you might make with a card, there are stipulations.
What does Doxo mean?
Doxo is the name of a financial app that allows users to pay their bills online, as long as the providers are part of the Doxo network.
So, you can’t hack your introductory rewards points on a Visa or American Express card to pay your mortgage. But, you can enlist an online payment service to boost your points with on a MasterCard, Discover, JCB, or Diners Club card for a low fee. Or, if you’re in a pinch, you can get a cash advance from your card issuer to pay your mortgage.
As an added perk, if you pay your card as agreed and keep your balance within a healthy ratio, paying a mortgage with a credit card can help you boost your credit score. To learn more credit building tips, sign up for our free business credit training today.