£50,000 Interest Only Mortgage?

Taff

Hi

I have a £100,000 mortgage on my property worth approx £180,000 and need a seperate interest free mortgage for £50,0000 to help out a member my parents stay in their home. They currenty have a £50,000 mortgage and paying £650/mth and are struggling finacially.

Their property is worth approx £14,5000 and wonder if I could get get this amout on interset only and what would be maximun term? I am 43 and earn approx £36k with a good credit history.

Your responses will be appreciated and hopefully I can avoid them taking out an Equity Release Mortgage which they are currently applying for. Obviously I dont want them to go down this route.

Many thanks

ACG

I think you will struggle to get a repayment mortgage for £150k, let alone an interest only one if I am being completely honest.

I do not do Equity release mortgages personally (although I am debating doing them), what is the problem with them taking out an Equity release mortgage?

Wake_up_call

Taff wrote: »

...earn approx £36k with a god credit history.

Well, that's just divine :A

Taff

Thanks for reply ACG. I want to keep it seperate from my repayment mortgage on my home. Idea is that they would just pay me the interest only payment monthly which they will be able to afford.

The equity realease lifetime mortgage doesnt seem to be a good way forward, because all the equity in the house would probably end up being used to pay Compounding interest. In ten years they will owe almost twice the original £50k figure.

Apologies for any typos ��

ACG

They probably would, but at least they do not then have to spend money on a mortgage and have more money to spend on whatever they want without worrying about a Mortgage forever more? They will not get evicted, they will be allowed to remain there until they are no longer able to for whatever reason. ER is now heavily regulated (rightly so) after a few shysters took advantage.

You should also consider that if your parents ended up in care and the government took their home to pay for it, what happens to this £50k secured against your home and not theirs?

getmore4less

What are the terms of their current mortgage.

How much can they afford.


How much can you afford.

Have they reviewed the moving options.

Taff

Cheers for replies.

They have considered downsizing but discounted this option as at 70 and 61 they really want to try and stay put.

They could afford a couple of hundred mthly payment for mortgage with would leave them some money to live on. It would be them paying me the mthly amount to me.

I was thinking of them taking out a life insurance so If one passed away the policy would cover the 50k borrowed.

I know there are many other things to consider and legal advice would be needed to ensure we have all bases covered.

I am still trying to establish if I could get a seperate £50k interest only mortgage in my name if i already have mortgage and if so longest term?

Thanks for raising the point ACG about care, which I will need legal advice on. Hopefully i wont need to secure the £50k againt my home and are able to do this against their home. Maybe they will have to transfer the house into my name?

Mortgages are not my strong point as you probably tell, but thanks for everyones time.

Thrugelmir

Taff wrote: »

I am still trying to establish if I could get a seperate £50k interest only mortgage in my name if i already have mortgage and if so longest term?

Realistically no chance.

When is their mortgage due for repayment?

Taff

Why not Thrugelmir?

Their mortgage is is currently repayment.

ACG

Im not trying to be awkward, but the cost of a £50k life insurance policy will be pretty steep. You would presumably looking at whole of life, which is usually taken out to cover a £5-10k funeral.

If you did term assurance, you would need to choose an end date/age if you did it to say 99 it is going to cost a bomb as its probably a 95% chance it will pay out.

Your income is not enough to support your mortgage plus a £50k interest only portion in the eyes of a lender I would not have thought. You could potentially do say £25k, which then mean your parents have to pay £25k on repayment and £25k on interest only to you - but you then still come to the point of paying for care etc. You could possibly take a second charge over the property for the £25k, but then you have to pay for legal advice and get permission form the current lender also.

Keep_pedalling

Frankly they would be nuts to let you do this. If you fall into financial difficulty yourself through unemployment, illness or a messy divorce they could find themselves out of a home.

ER is the better option for them as it removes the burden of meeting the repayments, and allows them to have a better standard of living. The only real downside is that it will effect any inheritance they leave, but their well being and security should trump that consideration.