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Interest Free Mortgage with Parents - Pay off asap or invest in a pension?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
1 reply 395 views
RCGRCG Forumite
7 Posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Hi

I'm 38 years old and have recently bought a property with the help of my parents. I invested £35,000 and they paid the remainder which was £168,000. Currently I am paying back £500 per month and putting £100 into a pension. I would like to pay it off asap but am also concerned about investing for my retirement. One thing I had thought was to focus on paying them back asap, then focus on saving to invest in another property to rent out as a way for extra income in the future.

I could probably save £400-500 per month and would like some advice about whether I should use this to pay my parents back or increase my pension payments?

ONe final thing I must add is that if both my parents were to die then their share of the house would be left to me in the will.

Thanking you all in advance for any help you may be able to offer.

RCG

Replies

  • Sepa74Sepa74 Forumite
    962 Posts
    Hi,

    You probably need to have a discussion with your parents. Don't forget that the money they gave you may be needed to fund additional support for them as they get older - they may be fit as fiddles now, but they won't always be. You do need to have a plan in mind for ensuring they have the financial resources to provide the care they will need as they age. Sad but true.

    However £100pcm in a pension is not going to provide you with any where near a decent retirement for your own old age, so you do need to make sure you are saving enough into a pension - a finance advisor should be able to provide advice there. You could think about buying a rental property to act as a second source of long term income, and the rental boards are probably the best place to start your research.

    But the great thing is that because you are able to take advantage of money already in your family you are not paying interest to the banks! However it's really important to treat money in the family as if it were the banks money, otherwise it will somehow slip through your fingers and you would have been better off paying interest on the mortgage, but having the discipline of the repayments.
    Borrowed £150,000 in an offset tracker mortgage in May 2007 - MFD May 2041 (67)

    Jan 2012 - £125,620.02 / 2,913.87 / Nov 2032 (58) :beer:
    Apr 2012 - £122,901.88 / 3,170.91 / Jul 2032 (58)
    Jul 2012 - £122, 589.02 / 3,507.99 / Sept 2032 (58)
    Oct 2012 - £120,476.31 / 3,889.42 / July 2032 (58)
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