Is overpaying with a view to releasing equity in the fututre sensible?

chilabe

Richey_ wrote: »

Fraud!

People like you push up interest rates for the rest of us, as well as insurance premiums etc.

You want advice on how to lie and defraud, erm no! You charlatan....

Thankfully the law isn't based on how somebody on a forum interprets another persons explanation (admittedly a poor one) of their financial situation.

enthusiasticsaver

chilabe wrote: »

Do people generally have a problem releasing equity this way?
I will likely be remortgaging after 5 years when my fixed rate is finished to find a better rate anyways.

You may have an issue remortgaging to release £30k in 5 years time if your income is insufficient to cover the mortgage or prices of property have dropped and your LTV percentage has changed. Or your credit file may have deteriorated due to you being overcommitted with other debt or missed payments. 5 years ahead is a long time to look and no guarantee that your circumstances will stay as they are now.


You could take out a Nationwide flexclusive saver to get 5% which would earn you more than your mortgage anyway. Or stick it in a Tesco current account earning 3% so there are better savings rates available than your <1%. Maximum of £3000 but you can have 2. It is possible to save £30k in current accounts and regular savers but it involves opening a few accounts and complying with terms and conditions which you may not want to do.

Obviously as you say if your family member is not that worried about getting it back in 5 years time if for any reason the equity release was not possible then yes overpay on the mortgage.

enthusiasticsaver

Richey_ wrote: »

Fraud!

People like you push up interest rates for the rest of us, as well as insurance premiums etc.

You want advice on how to lie and defraud, erm no! You charlatan....

I am not sure why you are insulting the OP. They have said quite clearly their lender knew of the arrangement and how does her financial arrangements push up interest rates etc etc?

getmore4less

chilabe wrote: »

How so? My legal liability is to not pay this amount back until 2040 as is stated in our loan agreement. I am not legally obligated to pay this amount back until 2040. If we set it up so that it was interest free for the first 5 years and I therefore said "i would like to pay you back within the 5 year period".

My lender has full knowledge of my financial liabilities. At no point have I told any lie nor have I hidden anything from my lender.

You will find out when you tell the lender you need the money to repay the loan if it is an acceptable reason to extend borrowing.

Not all lenders like debt consolidation.

You could just pay the £500pm to the family member.

Sea_Shell

getmore4less wrote: »

You could just pay the £500pm to the family member.

I'd agree with this. If you can save £500pm into a holding account, why not pay it back to them each month as you go. They then have the benefit of an extra income each month. By the sounds of it, they'd be quite flexible if in one month you were a bit short and skipped a payment (or 2). At least this way, you've no temptation to spend the 'pot' on something else that might crop up (emergency) and not have to worry about paying it off further down the line.

SavingSteve

Long and short of it is there are many lenders who will look on this negatively so you are not guaranteed to be able to get access to the £30k in 5 years. Therefore the safest bet is to save it separately and accept that the lower interest you are earning is the 'cost' to you if this arrangement.

Lastly, as others say, use high interest current accounts and regular savers to maximise your interest. Look into the Tesco current account and the Bank of Scotland current account + vantage product.

AnotherJoe

I think the idea to pay it back to the family member each month, or at least annually, is the best idea, it removes all risks and avoids all the hassle of balancing different accounts to get best rates and gets the OP to financial independence as soon as possible.

Just be sure to keep a very clear, detailed log of the repayments..