Advise needed on a 100% interest only mortgage

tarakul

delete thread please

firesidemaid

can they rent rooms out in the house to bring in some extra money?

how old/near to retirement are your parents?

are they working? is the business still going?

could they just sell it?

what rate are they on - it must be massive if they are paying £1200 a month interest only? that equates to approx 8.5%.

if they or you can get a deal nearer to 5% then the payment would be only £700ish. are you sure it's not a repayment? if the figures are correct , you probably have an 80% LTV.

Cannon_Fodder

if you buy it, you will need to find a £210K mortgage/deposit combination. do you have the deposit, around £21K minimum, £84K for the best mortgage deal?

their early repayment charge to come out of the fixed deal is what? it could negate any saving, should they move to a temporarily cheaper deal, although the rate they appear to be paying implies a credit history problem, so they may struggle to get a decent alternative deal, anyway.

on the surface it appears that they should sell.

they should never have bought if unable to afford repayment basis. I know this sounds harsh, but it needs to be said, so they don't make the same mistake with the next house. although they should go back to renting, really.

if they can bank £40K (210-170) that'll help pay the rent for a good while.

if your dad's business continues to have problems, they may have little income and lose the next house.

good question from firesidemaid, re their age - is it likely they may soon retire and can sell the business to fund their retirement?

tarakul

delete thread please

ILW

tarakul wrote: »

Hi

My advise to them is to sell it, I have been strongly advising them to do this but they have lived their too long and their emotional attachment is strong.

No extra rooms to rent out either.

They are long way away from retitrement. My dad is in his 50s and mum in her 40s

It is an interest only deal with a massive interest rate - that is why i was wondering what options there are to lower the rate. I need to reed the full paperwork for the mortgage but iknow there will be a charge if they move it while it is in its fixed period.

Their may be emotional attachments etc, but the hard cold fact is they are living in a house they cannot afford. Either downsize or you could just give them some cash every month to go towards the mortgage.

Dan_1976

You could buy a share in the property, if it does not impact on your financial affairs to much you could go on to the mortgage and help pay. Then when they sell you own some of equity.

If not the hard way (Sell it) may be the only option.

Pssst

Have they had an updated and very recent valuation? Better to act NOW whilst they still have time.

firesidemaid

would their current income enable them to get a 170k mortgage?

if it has 4 bedrooms can they not rent 2 out? i say this as it may be one of their only options to keep the house.

re. the attachment - it is costing them dearly. what would the rent or purchase price be on a small but suitable house in the area? if they are still only in 40s and 50s, it could be their downsizing house but a little earlier.

if they could clear 30k to put down as a deposit on a 140k house, would their income then cover a 110k mortgage? this would then cost them £458 a month interest only if they could get a 5% rate, but it would be better to go for a long fix on a repayment mortgage for as many years as your father could get one for.

there may be a redemption fee to pay even if they sell the house remember.