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You may be wondering why someone would choose to pay their mortgage with a credit card. Well, usually it’s to earn extra points, but there are a variety of other reasons. That said, some issues come with credit card payments for a mortgage as well.
How to Pay a Mortgage with a Credit Card
If you choose to pay a mortgage with a credit card, you must do so through a third-party service. In Canada, the most notable is PaySimply. With this service, you can pay a variety of bills using a few different payment methods. Plus, it’s simple to use.
In order to pay a bill using this service, all you need to do is search for the provider and determine if they support payments through PaySimply. If they do, then you can make payments using credit cards, cash, Interac e-transfer, and PayPal.
Once you find the provider that you want to pay, you can process the payments. However, what you pay in processing fees depends on the payment methods that you choose.
| Payment Method | Processing Fee |
| Credit Card | 2.49% - 2.5% |
| Debit Card | 2.49% - 2.5% |
| Cash or Debit at Canada Post | $3.95 - $7.95 |
| Interac E-transfer | 1.00% |
| PayPal Accounts | 2.5% |
Paying a Mortgage with a Credit Card for Points
If you are looking to pay your mortgage with a credit card in order to earn points, this could be incredibly difficult. While there are 3rd party payment options that are available, not all mortgage lenders work with them. Plus, if they do, then you’re likely only to earn the minimum amount of points since mortgage payments aren’t usually included in the extra point options.
Many people say that paying a mortgage with a credit card doesn’t earn enough points to be worth it. Plus, if you miss the payment on your billing cycle, you’ll have to pay a lot of interest on top of the interest you already pay on your mortgage payment.
If you want to use your credit to pay rent, rent payments can normally be accepted by credit card, but it’s up to the landlord. However, since these are still considered housing payments, fees could be involved. You may or may not have to use a third-party platform.
Paying a Mortgage with a Debit Card
When it comes to mortgage payments, mortgage lenders don’t like debt to be paid with debt. For this reason, you can actually easily pay your mortgage with a debit card. You can also pay it using pre-authorized debit payments, bank transfers, and other forms of direct payment methods. This is because most mortgage providers prefer mortgage payments that are set up to be automatic. This is usually set up at the time of procuring the mortgage and agreeing upon a down payment amount.
Best Credit Card to Pay a Mortgage With
There’s really no credit card that’s better than the rest. Which credit card you choose to pay your mortgage with is really up to you. However, a good choice is to go with a high-reward card or a low-rate card. Low-rate cards will allow you to make minimum payments if you can’t make the full payment right away. High-reward cards allow you to earn the maximum amount of rewards.
Plastiq Mortgage
Another service that allows you to use a credit or debit card in order to pay a mortgage is Plastiq. This service allows you to make your mortgage payments in the form of a cheque or wire transfer, when you’re really making payments with a credit card. That said, just like with a service, there are fees that you need to pay.
| Reason | Fees |
| Card Payments | 2.9% |
| Short-Term Financing | 2.75%-10.65% |
| ACH/EFT/Electronic | $0.99 |
| Paper Cheque | $1.49 |
| Wire Transfer: Domestic/International | $8.99/$39 |
| Overnight Cheques and Same or Next Day Payments | Starts at 0.2% |
They advertise that their payment services for individuals can allow you to make credit card payments for:
- Rent
- Utilities
- Mortgages
- HOA Payments
- Technology Services
- Club Memberships
- Taxes
- Tuition
- Auto Loans
Even though there is a cost for every transaction that you make, it is free to create an account.
Reasons to Pay Your Mortgage With a Credit Card
While paying a mortgage using a credit card isn’t recommended, there are plenty of reasons why people would choose to do so. The most common reason is that they’re unable to make the payment any other way. Using one of the third-party platforms can allow them to do this. In a major emergency, some will also take a cash advance of the amount they need and then deposit it into their bank account.
Another reason people pay their mortgage with a credit card is to avoid any late payments. By having transactions set up using their credit card, these payments are made on time every month without the risk of being late. It also allows you to hold onto your cash.
Due to the fact that credit cards are the most powerful tool available to increase your credit score, using them to make your monthly payments and then paying them off can really increase your overall credit score. For those looking to build their credit score, this can be a quick way to do so.
Disadvantages to Paying Your Mortgage With a Credit Card
The largest disadvantage of paying your mortgage with a credit card is the service fees. These fees are on top of any interest and other payments you already have to pay by using your credit card. The standard credit card service fee is about 2.5%.
Another disadvantage that you have to consider when using your credit card is the interest rate. Even with a low rate card, you’re still looking at a rate of 12% to 13% instead of 21%. Either way, though, you’re looking at incurring more debt, especially since you’re already paying interest on your mortgage to the lender.
How Using a Credit Card to Pay Your Mortgage Can Affect Your Credit
Since credit cards are a form of revolving credit, how much room you use out of your credit limit affects your credit score. This impacts something called your credit utilization ratio. The higher this ratio is, the more your credit score will be affected.
When using your credit card and not paying it off in full by the statement date, your credit limit is going to decrease. This could result in not only having a huge interest payment on your card but no longer being able to pay your mortgage. It could also reduce your credit score by a lot, which could impact your financial future.
Having a negative impact on your credit report is going to make it much more difficult to find solutions to cover your mortgage. Your best bet is to leave your credit card for other purchases and use your income to pay your mortgage.
Using Credit Card Rewards to Make Your Mortgage Payments
If you hold a rewards credit card or cash back card with the same financial institution that you hold a mortgage with, you may be able to pay your mortgage using these rewards. This is because these financial institutions offer a variety of ways for you to access these rewards.
That said, it can often be difficult to pay off your entire mortgage in points. This is because it can take a lot of points even to make a small dent. However, many people choose to use this because it can greatly reduce their monthly payments and make it easier to pay their bills.
If you use your credit card for everything and then pay it off in full every month, then you can earn a significant amount of rewards without creating more debt for yourself. Even a few hundred dollars a month can make a significant difference in your monthly payments and take some pressure off of your budget.
Options if You Can’t Pay Your Mortgage
While using a credit card can be the first instinct when you’re unable to make your payments, you might be surprised to learn that mortgage lenders can be quite accommodating in these situations. Often, you’re entitled to so many deferrals per year, or per the life of your mortgage, depending on your mortgage details.
If you’ve run out of mortgage deferrals and are unable to make payments due to no fault of your own, you could use mortgage or disability insurance if you have it. Often, these insurances will pay all or a portion of your mortgage until you’re able to start paying again, or the length of the insurance expires.
Another option that many use to lower their mortgage payments is refinancing. However, whether or not you can refinance and whether there will be a penalty is based on your mortgage contract. It also depends on the interest rates and the rates when you originally got a mortgage. For some, this could reduce their mortgage payments by hundreds per month.
How to Properly Use a Credit Card
While rent and mortgage payments can be put on your credit card bill, paying mortgage amounts with a credit card can be more costly since you can’t make direct credit card payments. Mortgage companies won’t accept credit card payments directly from you. However, credit card issuers allow you to make rent or mortgage payments. This is because it’s up to you what you spend. What they don’t tell you is that how you use your credit card can impact your credit score.
When it comes to rewards credit cards, you may notice that the interest rate is higher, and low-rate cards offer no rewards. This is because you aren’t meant to hold a balance on a rewards credit card. To make the most of your ability to earn rewards and your personal finance situation, you can use your card anywhere that credit card transactions are accepted. However, credit card companies don’t tell you that you should pay this credit card balance by the statement date.
The idea is that your balance that is reported to the credit bureaus is 30% or less of your total available credit limit. When you earn valuable rewards, you can increase your cash flow and use your rewards for making mortgage payments, cash equivalent purchases, or even as a statement credit. This can start to cost money, though, if you incur a lot of interest charges on your balance.
Things to Consider With Credit Cards
While mortgage lenders don’t accept credit cards for mortgage loans, this doesn’t mean that you shouldn’t have one. Before you choose one, though, you should narrow down the type of credit card you’re looking for and what it offers. Is there a balance transfer fee? Do they offer a welcome bonus? What are the transaction fees? What are the credit card interest rates? These are just some of the credit card details that you should pay attention to.
While most credit cards offer balance transfers, you should only use a low-rate balance transfer card if you have a high credit card balance. You should also look at any annual fees and how they relate to your current financial obligations. You should also pay attention to any bonus points on account opening and check if there are bonus points when you pay bills. If you get the right credit card, it can actually improve your credit and your finances.
Final Thoughts
While paying your mortgage with a credit card isn’t something that lenders allow, there are third-party websites that allow you to pay your lender with a credit card. However, lenders do prefer to have pre-authorized payments set up from a bank account with them. This is because they’re able to guarantee that they’ll receive their money.
They also don’t like you to use a credit card because you’re essentially using debt to pay off debt. While some may use this to gain more rewards, for others, it can lead to a slippery slope of even more debt. Since credit cards are also one of the most powerful tools for credit building, incurring too much debt can also ruin your credit history and your credit score.
