Re-mortgages

ktandpete

Hi all,

This is a fairly complicated situation, I will try to be as succinct as possible.

My parents have an interest only mortgage on their home of £135,000 which is made up of the deposits on mine and my sisters homes. My sister and I pay the interest each month. There home is worth £250,000 and their income is £30,000 PA from pensions plus some income from a buy-to-let. Their mortgage is with Northern Rock Asset Management and expires in 2017 and Northern Rock Asset Management will not offer a re-mortgage because of their ages (72 & 70), so we are looking to find a way to pay off this mortgage without any of us having to sell up.

My husband and I have a mortgage of £119,000 on our home which is worth £200,000. We took out the mortgage in July 2014 on a 2 year fixed deal. This is due to expire in July this year.

In August 2014 my husband had an accident, breaking his back, and was unable to work until April 2015. He is self employed and, unfortunately, the benefit that our accident insurance paid out was pitiful. We racked up £40,000 worth of debt since then. He returned to work in April 2015 and has been working, as a contractor, for Persimmon Homes since then. We are managing to pay just over the minimum payments on the cards but the interest is ridiculous and is really crippling us financially.

His profit for 14/15 was only £950.00. His profit for this 15/16 will be around £30,000. My income is £18,200 PA.

We have looked at the option of a secured loan to pay off the debt and have a much smaller monthly payment and a much shorter term, but we also need to consider that our mortgage term is coming to an end and that we are probably going to have to contribute around £40,000 to getting the mortgage on my parents house cleared as it is unlikely that they will be able to re-mortgage for £135,000 due to income and age.

We are aware that the housing market is buoyant at the moment but is likely to be flooded by buy-to-let sales in the next year.

My questions are:

• Should we look at re-mortgaging now (on both mine and my parents homes) whilst the market is buoyant and in case it crashes in the next twelve months due to the flood of buy-to-let homes?
• What is the best way for me to reduce our monthly income and meet my parents' requirements to pay off some of their mortgage?
• As we stand, financially, do you think we will get a good deal on re-mortgaging our home and what is the likelihood of us finding a cost effective way of clearing our debt?

I appreciate that this post is long and a little complicated so I am very grateful for making the time to read it and offer any advice that you might have.

Thanks

ViolaLass

Can't they sell the buy-to-lets?

ktandpete

Hi,

Thanks for your reply.

They have one buy-to-let which has around £50,000 equity in it. They are not keen on selling now because of the likely influx of buy-to-lets onto the market, they have good sitting tenants and they like the income.

Plus, as there is only around £50,000 in it, we will still have to raise money to cover the NRAM mortgage anyway.