£50,000 Interest Only Mortgage?

Thrugelmir

Taff wrote: »

Their mortgage is is currently repayment.

Wouldn't it be easier to lend them money every month to speed up repayment of the debt. The debt can then be repaid at a later date when the property is sold.

minimike2

Why are they not talking to their mortgage lender about making arrangements owing to financial difficulties?

Taff

ACG wrote: »

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.

Thanks for the above ACG. What do you mean by taking a second charge over the property and what would be involved in this?

This maybe a way forward to ease the burden as this could pay off their 27k secured loan which is a wopping £400/mth. Would It be best to see a finacial advisor or solicitor to get advise on the matter?

The last post mentioned speaking to the lender about the financial difficulties. What would they they achieve from doing this?

Thanks all the replies are appreciated

minimike2

You said they are struggling financially. If this is the case then they should engage their mortgage lender to see what assistance they can provide, if any, to ease the burden.

getmore4less

Taff wrote: »

Thanks for the above ACG. What do you mean by taking a second charge over the property and what would be involved in this?

This maybe a way forward to ease the burden as this could pay off their 27k secured loan which is a wopping £400/mth. Would It be best to see a finacial advisor or solicitor to get advise on the matter?

The last post mentioned speaking to the lender about the financial difficulties. What would they they achieve from doing this?

Thanks all the replies are appreciated

Are you saying there is a £50k mortgage AND a £27k loan?

what rate and term is that loan?

amnblog

I'm with ACG here.

Don't discount the equity release option.

If they borrow the money and you find later that you can, and want to, help them pay some of it it back, you can.

Even if you got lending in your name to pay off their mortgage, that would be a responsibility you may be carrying for 20 or more years.

Taff

Thanks I will check they have engaged with the lender regarding their finacial difficulities.

They have a 20k mortgage and a 27k secured loan. Not sure if the rate and term but will find out. I know they pay roughly £400/mth for the 27k secured part of loan and £250/mth on the mortgage.

The property would ultimately left to me and my sister and I am looking
To try and help in some way to reduce their £650/mthly mortgage to give them some quality of life.

Many thanks

amnblog

Equity release will reduce their monthly costs if they are on a no payment basis.

Keep_pedalling

Taff wrote: »

Thanks I will check they have engaged with the lender regarding their finacial difficulities.

They have a 20k mortgage and a 27k secured loan. Not sure if the rate and term but will find out. I know they pay roughly £400/mth for the 27k secured part of loan and £250/mth on the mortgage.

The property would ultimately left to me and my sister and I am looking
To try and help in some way to reduce their £650/mthly mortgage to give them some quality of life.

Many thanks

£27k ER to get rid of the high interest loan, and continue to pay the mortgage would be my suggestion.

getmore4less

Taff wrote: »

Thanks I will check they have engaged with the lender regarding their finacial difficulities.

They have a 20k mortgage and a 27k secured loan. Not sure if the rate and term but will find out. I know they pay roughly £400/mth for the 27k secured part of loan and £250/mth on the mortgage.

The property would ultimately left to me and my sister and I am looking
To try and help in some way to reduce their £650/mthly mortgage to give them some quality of life.

Many thanks

so they have done equity release once before.

£20k and £27k £250pm and £400pm. are the following terms for the following rates and combined charge interest only
rate 20k 27k I/O
0% 80m 67m £0
1% 83m 70m £47.50
2% 86m 72m £95.00
3% 90m 75m £142.50
4% 94m 77m £190.0
5% 98m 80m £232.50

That's the lot paid of in 8y.

could you and your sister both support them to secure the property?

If you chucked in £200pm each that would be for 7y max.
(unless that loan is at a silly high rate)

If the lender was sympathetic and income supported the eldest to 75 that's 14years at say 2.5% £402pm

over 25years £57k @ 2.5% is £255pm.

You also have to factor in the running costs maintenance and long term suitability of the place.


you need a good look at all three budgets to see what cash flow is available to support £57k of debt and see what options are available to get that money as cheap as possible.

Remember anything over interest only is savings(increasing equity)

eg if you added say £30k to your mortgage over 25 years that should be around £50pm interest and around £130pm total payment so £80pm capital/savings you get back eventually.

£50pm to help your parents keep their home and secure you a share(30/145= 20%) of it is not that bad an investment.

that would leave you with <75%LTV and < 4 income multiple

Also avoids the income tax issue of you having a loan that they pay.