Parents gift of paying lump sum off mortgage,

J_WIGHT

My father wants to pay off half of my remaining mortgage (as a lump sum). We have a repayment mortgage with Nationwide, 11 years left to pay. How is the best way to do this? Ideally we would like to half the years left on it. 

Carl2510

First question I think is can you pay that much usually only 10% a year so make sure you look at your terms & conditions first.

J_WIGHT

Carl2510 said:

First question I think is can you pay that much usually only 10% a year so make sure you look at your terms & conditions first.

Yes, I've looked and it states 10% of the original mortgage amount can be paid each year. The amount will equal 4 years if we did it like that, my father is keen to do the whole amount in one go but there will be fines in doing it like that. 
This is an incredible gift but I don't want to throw this gift away on charges  .

getmore4less

when does your current fix finish

J_WIGHT

getmore4less said:

when does your current fix finish

We are about to start the new term Feb 20th, this year. I'm making the call to lock in to another 5 years, next weekend. 

tacpot12

If he trusts you, your father can give you all the money in one go, and you can put three quarters of it on deposit, and make a payment every year for years. (This would be one gift for IHT purposes). You can put the money into a savings account in your name with National Savings and Investments, or (if it less than £85K) into a Savings account with a high street bank that you don't currently bank with. (The first 85K of deposits in Banks are protected by the Financial Services Compensation Scheme).

If he doesn't trust you, you will have to take the penalties that Nationwide will impose; this might reduce the effectiveness of the gift, but you will still save a lot of the interest that you would otherwise have paid. To reduce the mortgage term, you need to ask Nationwide to take the same payment per month that you are currently making. (You would do this if each time you make the four payments suggested in my first para). This will bring the mortgage term down. You might also consider whether you could pay a little more than you currently pay, and be done with the mortgage in say 4 years.

Finally, are you happy your dad can afford to do this? You should consider whether this is going to leave him short of money.

getmore4less

J_WIGHT said:

getmore4less said:

when does your current fix finish

We are about to start the new term Feb 20th, this year. I'm making the call to lock in to another 5 years, next weekend. 

There is no 10% limit at the switching point.
Old deal ends,  overpayment , new deals starts ,  might be on the SVR for a few days or longer if the money is not ready yet.. 

J_WIGHT

He's very keen to make it just one payment, we discussed everything else but he wants us to experience the feeling of the mortgage being halved. He has the funds, one of the lucky ones, born in the 20s had excellent jobs with great pensions and good invest. This gift is completely out of the blue.  I just don't like the gift losing its punch with fees being taken. 
We overpay our mortgage every month and have a year that can also be paid off.

J_WIGHT

getmore4less said:

J_WIGHT said:

getmore4less said:

when does your current fix finish

We are about to start the new term Feb 20th, this year. I'm making the call to lock in to another 5 years, next weekend. 

There is no 10% limit at the switching point.
Old deal ends,  overpayment , new deals starts ,  might be on the SVR for a few days or longer if the money is not ready yet.. 

So, your saying that if the payment is made now, before we update for the next 5 years, we should be ok? This months payment h
as gone and we have one more at this rate before we lock into the next one. 

MWT

You will need to let your current fix expire, then make the payment, then get the new fix...

J_WIGHT

MWT said:

You will need to let your current fix expire, then make the payment, then get the new fix...

OK, so wait until we've made next months payment and before I link into another 5 years fixed rate, pay the lump sum. 
Thank you for commenting, everyones comments  are appreciated