What can I do?

Oscar798184

Hello there!

First time poster on here.

My mortgage is due for renewal at the end of this year. To summarise my situation, my mortgage is at £72,000. My parents borrowed £38,000 to help me purchase my house. They have been paying the interest on this £38,000 for the past 5 years. Now I need to pay them back as it were.

I have been advised that I need to take an unsecured loan of £25,000 out to help pay back the £38,000.

I have almost £20,000 in savings that I was ideally going to use for the purchase of a new house. However, being in negative equity by some £10,000, I am stuck where I am!

I am looking to use the majority of my savings to help pay back my parents but really could do with some advice from anyone who has been in a similar situation. What are my best options?

I was hoping that somehow I could pay back my mortgage lender Nationwide without the need to take out a personal loan but I know that's wishful thinking!

Many thanks in advance!

Suarez

So your house is worth £62,000 yet you've been paying the mortgage for 5 years and had £38,000 deposit?

Is the mortgage interest only?

What was the purchase price?

Rafter

The good news is probably that you are going onto the Nationwide base mortgage rate which is only 2.5% so you should be able to save up faster.

The bad news is that it looks like you are stuck where you are now given negative equity. Are you sure you mean negative equity? That the property is worth £62,000 with a mortgage of £72,000 or do you just mean it has lost £10,000 over 5 years and is worth £100k versus the £110k you paid?

In your situation Oscar I'd give most of your savings to your parents - no point in paying interest what your parents borrowed at a higher rate than you are getting on your savings.

I'd borrow the balance of what you need over the shortest period possible that is still affordable for you.

Once that is paid off you should hopefully be in the position of having a £100k house with a £70k mortgage and nothing owing to your parents and a decent deposit to think about moving - although you will need at least 25% of the new property cost as a deposit to get a decent rate of interest unless market conditions improve considerably.

Good luck

R.

Oscar798184

Cheers Rafter

Just to confirm, I bought my house for £123,000. My mortgage was £85.000 with my parents helping make up the rest.

My mortgage now stands at £72,000 after 5 years. However, my house has lost £10,000 in value.

I'm currently trying to see which family members cold lend me some money that I can pay back without a substantial APR. I shold be able to afford reasonable payments every month but I'm trying to avoid taking out a massive personal loan if I can.

Cheers for the advice and best wishes to you too!

Thrugelmir

Give your parents the 20k savings and then repay them additional money every month.

Your mortgage repayments must have fallen so this should be easily achievable.

dimbo61

You need to check what your mortgage reverts to after the fix ends!
Read the paperwork or ring your lenders mortgage centre and ask.
If it is less than you are paying now then you can use that each month to pay back Mum and Dad.
Repay some of the loan with your savings and see if you can afford to pay extra to Mum and Dad each month.
Only take out a loan IF you have to pay back your parents ASAP

getmore4less

What is the structure of the £38k loan your parent have?

Interest rate, term, interest only/repayment, secured/unsecured