Can clear mortgage but ................. sound advice sought

reekishawnee

Hi,

It’s  a little bit premature asking for advice but it’s something that’s been on my mind for awhile.    I’m being made redundant around June July next year and since this was announced last year the redundancy package  has been negotiated & finalised so I have a rough idea of how much I’ll be getting for my 21 years service and although it’s very generous its not quite enough to solve the problem I will have and would like to hear your ideas & thoughts;

I have a shared ownership property with approx £35k outstanding (settlement figure in a years time, £37k today).  It’s not a friendly mortgage product.   (Kensington with the rate @ 3.25 added to the current libor rate with about 9 years to run)

To purchase the other half which we currently rent from the housing association will cost approx £65k (rent £250 pcm)

My redundancy package will fall short of around 10k and that’s with being quite prudent between now and then!   Which leaves various options to try and find a compromise;

Pay off the mortgage in full and then purchase say 30 to 40% of the outstanding 50% which is currently rented (which will obviously reduce rent dramatically)
Purchase the other half out right and then contribute 70 to 80% of the outstanding mortgage....

Ideally obviously I would like to pay the mortgage in full and also purchase the other half out right but that’s not possible in one go.    My preference is to buy the second-half out right as it is much better owning your own house and not having the housing association dictating a lot of things as they do.

Thanks very much for looking at my post and I look forward to your savvy insights.

Phill

ian1246

If you buy the housing association half & pay off XX% of your current mortgage, how much will remain on the mortgage? If you take this figure, you will be able to work out what the 3.25% interest will amount to each year.

Alternatively, if you pay off your mortgage and use your remaining capital to buy XX% of the housing association share, if you take the £250 per month rent and multiply it by the remaining % share the housing authority would have, this should give you a rough monthly rental figure.

Which is cheaper? Should give you an answer. Other thing to factor in is any Early Repayment Charges on the mortgage....

Tropically

How much other money do you have? 

reekishawnee

Right now pretty much nothing substantial.   I kind factored in everything I would have next July when I receive my redundancy like any extra we can put away between now and then but that will still be about £10-15k short to achieve the ideal scenario of being able to do both the things I want too.    At the moment I'm leaning towards purchasing the remaining 50% of the property and then halving the existing mortgage and then with the rent I wont be paying, overpay the mortgage along with any extra I can once I get another job... 

Thanks for replying.. 

Phil