A very big mountain to climb

sussexlad2009

Hi

My bother is in a pickle.
He is on a interest only for his £156,000 mortgage.
That works out at about £450 a month just now.
His salary is £40,000 (ish)
The worry of course is that as time goes by nothing is being done about the actual loan amount.
Currently he is on the variable base rate (as its low) but the worry is when it goes back up.
This does allow him to make overpayment's off the capital which I assume will reduce the payments.

OK, lets forget how he ended up like this the matter at hand is how best to help him.

I want to help and could manage some overpayment's for him but if I am going to throw my savings at this I want to know they will do some good.

Just now, looking at it I fear I will be p'ing in the wind!

Can anyone suggest ways forward please?

Thanks

John

opinions4u

You would be best helping him with practical advice.

Paying his bills for him will simply teach him to rely on you again in future. Don't create a dependency.

Teach him to stand on his own two feet financially. Help him to budget. Prioritise what debts to get rid of. Be there when he rings the lender to ask them to calculate what his payments will be when he transfers off interest only.

Here's a link to a calculator to give a guide.

sussexlad2009

opinions4u wrote: »

You would be best helping him with practical advice.

Paying his bills for him will simply teach him to rely on you again in future. Don't create a dependency.

Teach him to stand on his own two feet financially. Help him to budget. Prioritise what debts to get rid of. Be there when he rings the lender to ask them to calculate what his payments will be when he transfers off interest only.

Here's a to give a guide.

Yes I accept all that but lets look past it.
If I had say £5000 that I could use to help with just this one issue how best to use it?
That calculator shows a 17 year plan would need over £1000 monthly and there is no way he could do that.

So, what is best?

Thanks

McKneff

I have no advice, i just want to say i think youre a very nice brother, you must love him very much.
good luck, whatever happens
Annie

opinions4u

sussexlad2009 wrote: »

Yes I accept all that but lets look past it.
If I had say £5000 that I could use to help with just this one issue how best to use it?

You have posted very little about his financial circumstances. He's on decent money. What is it about his circumstances that makes this a commitment that he can't afford.

That calculator shows a 17 year plan would need over £1000 monthly and there is no way he could do that.

Why not?

The size of mortgage shouldn't be a problem. So what else is?

PasturesNew

He takes home about £2,460/month
His mortgage is £450/month

If we give him a good life that includes running a car, having a social life, partying, holidays, clothes .... he should still be able to shovel £1000/month every month at his mortgage.

sussexlad2009

Hi again, yes I do love him :-)
My wife just died and while I am not a rich man by any means I fail to see the point in me having a swollen bank account while family suffer!

Yes he is on a good whack! works out around £2050 a month. Out of that he has two girls at school, and all the running costs of a 4 bed house.

I am trying to understand it all myself but they are now clearly struggling!

opinions4u

sussexlad2009 wrote: »

Hi again, yes I do love him :-)
My wife just died and while I am not a rich man by any means I fail to see the point in me having a swollen bank account while family suffer!

Good for you. Sorry about your loss too.

I'd say before you throw money at what you perceive to be a problem make sure you understand what the root cause of the problem is. Make sure the money creates the changes necessary to ensure he can meet his commitments long term.

Yes he is on a good whack! works out around £2050 a month. Out of that he has two girls at school, and all the running costs of a 4 bed house.

- try to find out what other loans he has. Can these be cleared?
- is he in arrears with anything? Deal with this sort of issue first, as long as there's a plan to get back on an even keel afterwards.
- what other significant outgoings has he got?
- is he paying school fees? Would he qualify for a bursary from the school?

I dislike interest only mortgages and share your desire for people to get a grip on repaying within an agreed term.

But one option would be to remain on interest only with a view to selling up and moving down market within the next 17 years.

Or even moving in to a 3 bed home with a smaller mortgage in the next year or two.

sussexlad2009

Hi

Spent many hours today digging through his in and out goings.
Found out that he has £782 a month that could go to paying off the mortgage.

According to that calculator for 156000 over 20 years the monthly premiums would be £1100.
That is not a million miles from what they have.
So provided he can get an offer along those lines I have said that for 18 months I'll pay him £318 per month to use against the mortgage.
This gives him 18 months breathing space to decided about down sizing etc while paying off some of the capital.

This looks like the most efficient use of my funds?

Thanks