5 yr fixed term on 14 yr mortgage, ended, what next?

Yorkie1

So, 2 years ago your parents took out a 14-year interest only mortgage, the first 5 years of which were at a fixed interest rate? And although you are saving for a deposit etc of your own, you won't be in a position to buy the house off them for about another 5 years because of credit issues?

In three years time, the mortgage interest rate will revert to the SVR - the follow on rate which you were asked about in an earlier post. There is nothing to stop it continuing on that SVR until you are in a position to try to get a mortgage to buy the house off the parents. You could start overpaying on the capital but I think it will depend on the comparative interest rates you'll get on savings compared to the mortgage.

The risks are that the variable rate goes up too much so you can't afford to pay the parents' mortgage, and/or you don't manage to get a mortgage for the necessary amount before the original capital becomes due at the end of the 14 years time. If that occurs, I guess you might well have to sell the property but there's no point in worrying about that now. Unless your parents have significant post-retirement income it's unlikely that the mortgage will be extended beyond their retirement.

As other posters say, keep saving until your credit has sufficiently cleared and you have a big enough deposit.

costaerer

gizmo111 wrote: »

I'm a bit concerned that you have no idea what your financial arrangements are.

Do you pay rent?

they paid the deposit. we pay them monthly and they pay the mortgage. so we basically pay the mortgage, theyre just the middleman!

Thrugelmir

costaerer wrote: »

they paid the deposit. we pay them monthly and they pay the mortgage. so we basically pay the mortgage, theyre just the middleman!

If you are not in a position to finance a mortgage in your own names. Then consider selling up.

As I'm sure that the scenario you are in, isn't the one your parents envisaged when originally purchasing the property. Seems as if you are in effect merely paying rent.

costaerer

my parents have said that if we can, we can take the mortgage in our own name. the £20000 was effectively a present to us. they said also financially its better investment for them to possibly keep the flat and rent it out and give us the same amount they gave us originally for a deposit on something bigger when we want to move.

costaerer

Thrugelmir wrote: »

As I'm sure that the scenario you are in, isn't the one your parents envisaged when originally purchasing the property. Seems as if you are in effect merely paying rent.

quite the opposite. this is infact the exact scenario they envisaged!