Private Mortgage Advice

dolcelatte

A friend of mine who has about 50k to invest but is disappointed at current investment rates has suggested I borrow her money as a mortgage to upgrade to a better property. I was thinking that a 30k loan over 10 years would suit my needs and give her the income she is looking for. Is this a feasible arrangement and what other issues would we need to look at? She is 63 and retired and I am 48.

Kavanne

I lent my mum 30k to pay off her mortgage. Now our solicitor said he could do an agreement with 1 of 2 options. Either I own a percentage of her house or she pays me back monthly in a loan type agreement. We went with the 1st option but at least my solicitor thinks you can have the 2nd too

StuartGMC

Do get this drawn up legally, and have consideration of what needs to be in place in the sad event of your friend dieing and her heirs wanting the funds repaid. You would also need to have cover for yourself to pay it back too in your own case. Definitely get it as a legal arrangement and not ad hoc.

Of course the other question is whether you actually need/want to upgrade as you are of course paying her interest on her loan and committed to doing so.

Finally, see if others here can comment on borrowing from friends and whether this has soured the relationship later?

Helga14

Personally I make a rule never to lend or take money from friends (bar very short term emergency situations) certainly not long term. I'd much rather owe a bank than a friend. But each to there own. Certainly make sure you get a proper written agreement.

The only person I'd trust to do something like this with is my mum.

dimbo61

The other option is to get an offset mortgage with YBS ( there may be others ) and your friend could have her own offset account in her name offsetting your mortgage.
That way if your friend needs the money she can take it out at any time ( the account would be in her name and you would have no access to it.
You could get a 10 year fix rate deal and pay net interest which takes into account any money in the offset accounts ( you must have one aswell )

StuartGMC

Dimbo61
That looks like a much neater solution.