Cleaning up for parents. Loans + SOA Calculator

enthusiasticsaver

kylos wrote: »

I mean extending the term so they can pay it off eventually. Maybe put more towards it and get it over with sooner. I don't think they'll want to dip in to their pensions or life assurance policies unless it's totally necessary. The solar paneling thing doesn't appear to have a deadline, so they could pay more towards that after the consolidation loan is gone.

I am off to bed in a moment but will just post once more.

It makes sense from an interest point of view to pay off debt asap and extending terms usually ends up costing more in the long run but reduces the monthly payments. I have not seen anything in your posts so far which says they are not meeting the monthly repayments but you seem unduly anxious about terms. Is that because they are struggling with repayments?

As I see it from the soa you put up earlier and your posts since the mortgage will not be repaid by 2024 unless they up their repayments to £375 or possibly more depending on when in 2024 the term is due to finish. If they cannot afford £375 a month then contacting the building society and asking them to convert the mortgage to full repayment and setting the repayment to an affordable amount to repay within their working life should be possible even if that is later than 2024.

As you say the consolidation loan is due to be repaid in 61 months if they repay the £181.89 each month. That will be a repayment type loan so as long as they pay the monthly repayment it will be gone by then. Same applies to the solar panel loan and at £135 a month at 9.9% interest it should be repaid in 5 years.

My advice would be to use the £11,100 cash in savings to repay the most expensive debts which are the credit card and the consolidation loan. Then if the soa shows it as affordable they repay the mortgage at £375 a month (after speaking to Chelsea building society) to make sure there are no penalties and it will be gone by 2024 and any extra money goes to pay off the solar panel loan as that is also costing 9.9% interest. The MSE way of doing it would be to target the solar panel loan rather than the mortgage as the interest rate is higher but given the mortgage is secured on the house I would target that first.

kylos

Thanks, I'm only anxious because all of this could have been sorted way sooner. Luckily this wasn't found two years from now, when it would've started getting worse. I'm not an expert on mortgages or loans, or credit cards, but I do know more than my parents. So when I saw the numbers and read some of the statements, it came as a big red flag to me. But I also knew they weren't in very serious danger, and luckily it hasn't lead to a downward spiral.

I will inquire about the possibility of taking some of that life assurance out to get rid of the solar paneling. We already have a plan in place to get rid of the credit card, so that's not a problem. After that it's figuring out what's left, and if Chelsea will extend the terms. If they won't for some reason, then it's gonna' get difficult. But we'll cross that bridge when we get to it. I'll let you know how it goes in the coming week or so.

Thank you!

LilElvis

kylos wrote: »

Thanks, I'm only anxious because all of this could have been sorted way sooner. Luckily this wasn't found two years from now, when it would've started getting worse. I'm not an expert on mortgages or loans, or credit cards, but I do know more than my parents. So when I saw the numbers and read some of the statements, it came as a big red flag to me. But I also knew they weren't in very serious danger, and luckily it hasn't lead to a downward spiral.

I will inquire about the possibility of taking some of that life assurance out to get rid of the solar paneling. We already have a plan in place to get rid of the credit card, so that's not a problem. After that it's figuring out what's left, and if Chelsea will extend the terms. If they won't for some reason, then it's gonna' get difficult. But we'll cross that bridge when we get to it. I'll let you know how it goes in the coming week or so.

Thank you!

How long until your parents reach state retirement age? The BS is unlikely to extend beyond that date unless they have final salary pensions which will prove a guaranteed income sufficient to make the repayments.

LilElvis

They definitely need to look at their buildings and contents insurance on renewal - I pay a similar amount, but that is for a house worth multiple times the value of theirs and includes several high value items of jewellery. If they don't feel up to using price comparison sites then at least get them to speak to a broker.

kylos

They got another 10 years til retirement. So even a few years extension would easily be enough if they were to pay more than they currently are. I encouraged them not to ring up Chelsea til they had a clearer picture of what's been happening.

Of course, my Mother had no idea, while my Father had zero plans in place to get a new home insurance, to pay off his credit card or anything else. In fact.. he wanted to get new windows installed. So I thank you guys here for helping us to understand things more, it's obvious to you guys but not so much to us, especially my parents lol. They've never been great with money.

Sea_Shell

You mention this £11,000 as both savings and a life insurance amount. Which is it?

As far as I know you don't "save up a pot" with Life insurance, (it only pays out on death) or have they effectively "self insured" by saving this cash?

Sarahwithlove

If Chelsea building society won't allow them to extend the mortgage I'd suggest going to a mortgage broker. You can find ones that don't charge these days and hopefully they can give you some advise. Last thing you want is for them to lose the property. It may be they will have to remortgage with a different company when current one runs out.

enthusiasticsaver

I am also confused by you talking of taking cash out from a life assurance pot. Is it an endowment policy? They are not that popular now but were in the eighties and nineties although most have matured now. Normally as Sea shell says there is no cash pot with life assurance so I am assuming they do not actually have a savings account with £11k in it in which case they will need to repay these debts from their monthly income. They may have no option but to use their pension otherwise if Chelsea will not agree to extend the term. Good luck in getting a plan together.

enthusiasticsaver

kylos wrote: »

They got another 10 years til retirement. So even a few years extension would easily be enough if they were to pay more than they currently are. I encouraged them not to ring up Chelsea til they had a clearer picture of what's been happening.

Of course, my Mother had no idea, while my Father had zero plans in place to get a new home insurance, to pay off his credit card or anything else. In fact.. he wanted to get new windows installed. So I thank you guys here for helping us to understand things more, it's obvious to you guys but not so much to us, especially my parents lol. They've never been great with money.

I would have thought if they still are 10 years off retirement the Chelsea BS will be ok about extending the term but it depends on their credit history. It does sound as if they are not good forward planners and I would definitely caution your father no5 to carry on being so cavalier about taking on new debt for windows given their current situation.

kylos

Some very serious progress today. My Father got rid of Sky Protect and downgraded to the basic package, which saved him over £33 a month. The Credit Card is paid off, and several other things have been changed to ease the burden. The next step is to consider the new home insurance which I'm discussing in the other post I have in the mortgage section.

Considering switching the BT Homecare 400 cover to something only boiler related, but ehh.. it's risky because literally no one else would cover the cost of the boiler if it were to break down and they need a replacement. Also aside from Homeserve, other supplies don't seem too great in terms of customer service. Then there's the internet and phone line, which I'm sure we can save on there as well.