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Derek Tallent
By: dtallent
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Can I Pay My Mortgage With a Credit Card?

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Some business owners get tired of renting a building and decide to buy their very own office or business location. Obviously, this means that you will have to start paying a commercial mortgage on the property. 

In some unfortunate circumstances, business owners may start struggling to pay their mortgage payments. Some try to “put off” payments by shifting the debt to another account (i.e. a credit card).  Desperate times may call for desperate measures, but sometimes certain measures may not be such a great idea.

In this post, we’ll go over this and other alternative payment options to show what you can do when you cannot keep up with your mortgage payments.

What Happens If You Don’t Pay Your Mortgage?

Before we start, you need to know what happens if you don’t pay your mortgage. 

When you don’t make your mortgage payments on time, the lender that sold you the property will file a notice of default to you. If they still do not receive payment, they will begin foreclosing on the property and preparing to auction it off or resell it. 

To sum up, not only will you be evicted from your building, you may face legal trouble as well. This is why it is so important to always make your mortgage payments on time.

Paying Your Mortgage With a Credit Card

Now that we know the importance of making timely mortgage payments, what about paying them off with a credit card? 

The logic is that you are “deferring” the payment by adding it to your credit card bill. This means that your mortgage payments will be shown as paid on time, you will just have to pay a higher credit card bill later. 

Black credit card on dollar banknote. concept: pay mortgage with credit card

Why you shouldn’t pay your mortgage with credit card

There are a few things to keep aware of when doing this:

1. It’s not always an option

Some lenders don’t have the option to pay your loan with a credit card, others require a very complicated process to use your credit card to pay it off.

2. Not always financially lucrative

Credit card debt will cost you much more money than a mortgage. This is because most credit cards have very high-interest rates, so shifting your debt to your credit card will usually result in you owing much more money in the long run.

3. Transfer fees

Most lenders and banks will issue transfer fees for those trying to use their credit cards to pay mortgages or loans. This will also lose you more money than paying the mortgage traditionally.

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What Is The Difference Between Loan and Mortgage?

4. You won’t decrease your debt

The reality of using your credit card to pay off a mortgage is that you are not really paying off anything. You will still have just as much (if not more) debt, and you will be no closer to paying it off. 

Usually missing payments is a symptom of a bigger problem, and if you don’t fix that problem it will likely not matter that you paid one or two more mortgage payments on time.

View of empty chairs and table in office. concept: pay mortgage with credit card. Designed by peoplecreations / Freepik

How to Pay Off a Mortgage

Since we’ve shown the possible pitfalls of using a credit card to pay your mortgage, we want to make you aware of some other options and compare them to paying with a credit card. 

1. Borrowing From Your Retirement Account

While this is an option, it is one that needs careful consideration, it might as well be a last resort. 

In a sense, you would merely be borrowing from yourself to make your mortgage payments. However, there are some catches. 

The first is that you may have to pay a penalty on your retirement account for taking it out early, and you will likely have to pay taxes on the amount you take out as well. 

You also may need to repay the amount withdrawn if you lose your employment after borrowing from the account. 

While this may be a last resort option, be sure to consult a financial advisor to make sure you don’t end up triggering tax penalties.

2. Extending the Payment Term

One way to reduce your mortgage payments is to simply extend the payment term. This means that you will make payments from say 15 years to 30 years instead. This will lower your monthly payments and make them more manageable. 

Most lenders offer this for a 250 dollar fee. 

The obvious downside here is that it will take much longer to own the property yourself. However, if it comes down to a longer payment term or a foreclosure, an extension is definitely a good option you should consider.

3. Refinancing Your Mortgage

In some cases, you may be able to refinance your mortgage to have lower interest rates and lower payments without having to extend the payment term. 

This is often a good option even if you aren’t having trouble keeping up with your payments. After all, who would say no to lower payments? The key thing here is that your credit score must be quite high to get substantially lower payments. If your credit score is poor, this is likely not a viable option.

4. Renting Out Part of Your Property 

Another option that many business owners forget is to rent out part of your property to make some money to put towards the mortgage payment. 

The biggest problem is that this can be a lot of work. You will likely need to vet any potential renters, make sure your space is up to snuff, and then take the time to search for any potential clients that could use your space. 

This is often a lot more work on you, but it can be worth it if it prevents a foreclosure on the building.

modern restaurant interior design. 3d rendering concept. Pay mortgage with credit card

There are always options to make mortgage payments

We hope that this post has opened your eyes to some of the options you have when you run into trouble paying your mortgage. 

Hopefully, you don’t find yourself in this situation, but at least you will know your options if you ever do. 

If you want to learn more about what you can and what you shouldn’t pay with a credit card, we recommend reading:

Young attractive woman looking stressed and worried with card payments and home finances accounting costs charges taxes and mortgage in paying bills financial problems and credit card debts concept. concept: business loan

Can I pay a business loan with a credit card

 

 

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