Reducing 5% Interest from my Parents

2bak860

Hi,

I borrowed £20k from my parents for a deposit on a flat. That came with 5% interest. I've now got the amount down to £10k, but from chats here, wonder whether I should move some of the loan amount to a card, to reduce the term and to reduce the period of paying 5% interest.

Specific questions:

- Because I have borrowed money from my parents, am I looking at balance transfer or a new purchases credit card?
- Do I apply for a new card or add to my current 0% cards?

I will be talking to my parents about this - they'll probably be worried about new borrowing, but I want to make my debt my b!tch and get the amount down!

thanks,

[Deleted User]

Well, you won't be able to BT from your parents. You would need a money transfer option to put the money into your (or their) account.

But bear in mind you'll pay a fee in the region of 4% and may then have a high go to rate once the promo period has finished.

2bak860

Thanks zx81!

I see. Maybe it would be best to focus on paying off that one with 5% first. It's the largest interest I've got (even more than my mortgage).

thanks,

LplateSaver

Why not put all spends groceries/petrol/clothes/etc on a 0% card and use the spare cash to pay off your parents sooner (unless you're already doing that).

2bak860

Hi LplateSaver,

My spends are on a joint current account - no interest there. And spare cash goes to paying off the parents. Hope that's what you meant

thanks,

HappyMJ

2bak860 wrote: »

Hi,

I borrowed £20k from my parents for a deposit on a flat. That came with 5% interest. I've now got the amount down to £10k, but from chats here, wonder whether I should move some of the loan amount to a card, to reduce the term and to reduce the period of paying 5% interest.

Specific questions:

- Because I have borrowed money from my parents, am I looking at balance transfer or a new purchases credit card?
- Do I apply for a new card or add to my current 0% cards?

I will be talking to my parents about this - they'll probably be worried about new borrowing, but I want to make my debt my b!tch and get the amount down!

thanks,

It sounds like you've got the right attitude to refinancing. It's not normally recommended but what I would do is try a Sainsbury's loan a £10,000 loan over 3 years which will cost £293.21 a month at 3.6%APR which is less than what you're paying to the bank of mum and dad.

2bak860

Thanks HappyMJ,

I think my first port of call is to see whether they will reduce the Interest - there have been murmurings that it could go down to 3% which would be excellent.

I'm only paying them £100 per month, so should aim to increase that asap.

Appreciate the comments from the MSE community!

[Deleted User]

Ask them for a copy of the credit agreement. If they can't provide that, it's unenforceable and you can ignore their demands for payment.

Only joking.

CLAPTON

2bak860 wrote: »

Hi LplateSaver,

My spends are on a joint current account - no interest there. And spare cash goes to paying off the parents. Hope that's what you meant

thanks,

no that wasn't what was meant



you may be able to get a CC with zero % on purchases for say 12 months or more

one can then use this for all 'normal spending' (groceries, petrol etc) and hence reduce your normal outgoings for the period of the 0%

you could use the money 'saved' (i.e. spent on the 0% purchase card) as a free CC loan to pay off your parents earlier:
however this only works if you can clear the CC once the 0% runs out.

HappyMJ

2bak860 wrote: »

Thanks HappyMJ,

I think my first port of call is to see whether they will reduce the Interest - there have been murmurings that it could go down to 3% which would be excellent.

I'm only paying them £100 per month, so should aim to increase that asap.

Appreciate the comments from the MSE community!

Make a deal with them £280 a month for 36 months and that's the end of the debt....assuming you owe them exactly £10,000.

2bak860

Thanks Clapton,

I guess I don't really understand putting normal spending on a purchase credit card 0%. I use my purchases cc to help with cash flow - for example using on holiday, then paying off over time.

How does buying my groceries on a 0% purchase credit card differ to paying on my current account? Is there a credit trick I'm not aware of?

thanks!