Loan/Borrowing from family

Sarah100_3

Hi, I wondered if anyone could give me any advice about borrowing from parents.

Here is our situation:

We have a £100,000 mortgage.
Also a £25,000 SECURED loan on a horrible 10.6% rate taken out about 4 years ago over 15 years when we were struggling. We haven't missed one payment and I know that we are paying horrific interest on this loan.
I also have savings of about 5k
Recently our parents said they have £20000 that we could borrow which is almost certainly on a lower rate and we could probably pay it off over 5 or 6 years.
I have a good, trusting relationship with my parents and I am really tempted by the offer to pay off the secured loan however I want to ensure that, should something go wrong (lose job etc) that they would be protected.
My question is this:
What is the best way/s to ensure my parents are protected and is taking the loan a good idea all round?

Many thanks in advance,

RAS

Sarah

i would suggest you go over to the debt free forum and post up a full SOA.

You also need to read the terms and conditions of that loan - if it have a frightful APR, you may have a very high exit penalty, which you need to take into account.

With respect to the loan from your parents, you need to address the issues that led you to get the secured loan before you think about changing things.

MrsTinks

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

Sarah100_3

Many thanks for your reply. The exit fee is only about £400. ( I have asked for the figures already and they have been posted). Excuse my ignorance but what is an SOA? (statement of accounts?)

Thanks again

Sarah100_3

Thank you,

Since I am new, please could you tell me where you posted it to.

Thanks

RAS

You have two thread, may ask fermi or Tine to join them together?

fatbelly

The Statement of Affairs calculator is here.

Please format it for mse and copy and paste it in this thread.

RAS is right - unless we can see the whole picture we can't really advise.

Sarah100_3

RAS wrote: »

You have two thread, may ask fermi or Tine to join them together?

No problem to join the two together.

Thank you.

tyllwyd

Sarah100 wrote: »

.... I have a good, trusting relationship with my parents and I am really tempted by the offer to pay off the secured loan however I want to ensure that, should something go wrong (lose job etc) that they would be protected.
My question is this:
What is the best way/s to ensure my parents are protected and is taking the loan a good idea all round?

I don't really see any way your parents would be protected if you couldn't repay them unless you take out insurance to cover the loan. Or possibly make it a new secured loan on your house (but of course they would probably be very reluctant to take legal action against you, and if you were in negative equity your mortgage lender would take priority). If you got into trouble and had to do a debt management plan etc your parents would have to be treated the same as any other lender.

So (as far as I can see) it is very difficult to make sure they wouldn't suffer if you got into trouble - in my personal opinion, I don't think you should accept the money unless they could afford to lose it if the worst happened.

carkeyz

I wouldnt, purely on the experience I am having - my father is taking me to court over money he actually GAVE me - I have posted about it if you want to have a look.
Thats just my personal experience and it is probably very biased but just think long and hard because money will cause rifts believe me.

x