Can you pay a mortgage with a credit card?

In Australia, most lenders do not allow you to pay your mortgage with a credit card — at least not directly. It’s technically possible through some third-party services and cash advances, but those processes are complicated. Plus, when you add up the costs, those options might not be worthwhile.

Acceptable ways to pay your mortgage

Lenders all have their own policies about acceptable ways to pay your mortgage. There may be exceptions among individual lenders, but the usual payment options are:

direct repayments from your bank’s transaction account
internet banking and BPAY
electronic transfer
visiting a branch
direct debit from another financial institution
phone banking.

» MORE: Can I transfer money from a credit card to a bank account?

Lender rules and restrictions

Each home loan lender will have different rules regarding credit card mortgage repayments. Those restrictions are usually based on regulatory guidelines, interest rate differences, and fees.

Regulations: Lenders with credit licences must comply with ASIC’s responsible lending regulations. They may interpret accepting credit card mortgage repayments as irresponsible lending.
Interest rate differences: Credit cards can have much higher interest rates than mortgages. So, allowing customers to pay their mortgages with a credit card exposes them to higher interest costs. Those add up and can lead to financial difficulties if mortgage holders increase their interest-related debt with every mortgage repayment.
Merchant fees: Lenders want to skip the merchant fees that come with accepting credit card payments.

Possible perks of paying your mortgage with a credit card

Lenders may prevent you from directly using your credit card to pay your mortgage, but there are ways — such as third-party bill-paying apps — to work around this restriction. So, why would you want to?

To earn points and rewards

Many credit cards offer points for every dollar you spend. You can redeem those points for various rewards such as flights, holidays, merchandise or even cashback offers. Mortgage repayments amount to thousands and thousands of dollars annually. So, you could theoretically accumulate a lot of rewards by paying with your credit card.

However, you need to check with your card provider to see if the transaction you plan to make will earn rewards. Not every type of transaction is eligible to earn rewards.

Cash flow flexibility

Depending on your contracts, you may have more repayment flexibility with your credit card payment than your mortgage. Your home loan repayments are scheduled for every fortnight or month, whereas credit card debt can come with a non-fixed repayment schedule and interest-free days, typically 55 days or more. Plus, you’re only required to make a minimum monthly payment on a credit card, an amount that’s likely less than your mortgage repayment.

While using a credit card means you are still in debt, it can afford you a more flexible timeline to repay the money. Just make sure you’re aware of the interest accruing on your credit card debt.

» MORE: How to pay off your credit card

To avoid a missed payment

Late mortgage payments can negatively affect your credit report and relationship with your lender. If you’re having a temporary financial struggle and can’t afford to pay your mortgage any other way, using your credit card could be an acceptable way to avoid late-payment penalties or defaulting on your loan.

» MORE: How to avoid mortgage stress

Ways to use a credit card to pay your mortgage

Third-party apps

You can make mortgage repayments with a credit card through a third-party app. Bill-paying apps — such as Easy Bill Pay — allow you to identify the bills you wish to pay and select your preferred repayment method. Thus, you could theoretically choose your mortgage and pay using your credit card.

Each credit card provider and bill-paying app will have different restrictions and requirements for the types of payments you can make, so you’ll need to check first. For example, some popular third parties, like Sniip and Pay.com.au, prohibit mortgage payments but will allow you to pay rent with a credit card.

Cash advances

Another way to pay your mortgage using a credit card would be through a cash advance. Most card providers offer this facility where you can physically withdraw funds from an ATM and then use that money to make your mortgage repayment.

However, before going down this route, you should know that it will cost you a pretty penny in fees and interest. Unlike a cash withdrawal from a bank account, the money withdrawn in a cash advance has to be paid back with interest, and cash advance interest rates are very high.

» MORE: Can you withdraw cash from your credit card?

Should you bother?

Using a credit card to pay your mortgage essentially kicks the can down the road. As a result, you will likely spend far more in interest and fees in the long run. Here are the main factors to consider:

Fees and interest

Credit cards come with many fees. These can include:

annual fees
establishment fees
overlimit fees
late payment fees
cash advance fees
transfer fees.

And, again, credit card interest rates are much higher than what’s charged on a home loan.

Credit score impact

Any time you take on debt and miss repayments, it can impact your credit report and potentially harm your credit score. A lower credit score could affect your ability to get other forms of credit in the future. It can also limit who you can borrow from, the types of loans you are eligible for, and the interest rates and terms a lender will offer.