Loaning money to family members to invest in P/Bonds

DireEmblem

col.escargot said:

DireEmblem said:

You have said in 2 years you can pay off your mortgage fee free.  How much is your 2 years worth of interest in comparison to the early repayment fee?

It will be about £800

So in reality, it would cost an extra £1200 to close down the mortgage early.  Is that saving worth the faff of transferring to family and requesting it back?

Laycity

How much is your outstanding mortgage? I’d just put the lump sum in the highest interest account I can find that allows access to carry on paying your mortgage for 2 years to avoid the ERC. Lending money to family members for premium bonds is problematic with the odds on them winning anything substantial also being very high.

TheAble

Strange the ideas people have reaching for yield. Don't complicate your life - just put it in the highest interest account you can find until you can pay off the mortgage.

Aceace

DireEmblem said:

col.escargot said:

DireEmblem said:

You have said in 2 years you can pay off your mortgage fee free.  How much is your 2 years worth of interest in comparison to the early repayment fee?

It will be about £800

So in reality, it would cost an extra £1200 to close down the mortgage early.  Is that saving worth the faff of transferring to family and requesting it back?

You need to add back the roughly 0.9% likely PB winnings to that equation. 

Gers

https://forums.moneysavingexpert.com/discussion/6253979/help-desperately-needed#latest

A tale of money being 'lent' to family members who now claim it as a gift.

steampowered

This is a total waste of time. Not worth the hassle.

The effective interest rate on premium bonds is 1%. Less than inflation. 

If you want the thrill of "maybe winning a million", buy a lottery ticket.

Albermarle

The chance of someone winning a Million even holding the full £50K is once every 80,000 years , so perhaps you can discount this as a potential scenario.

eskbanker

steampowered said:

The effective interest rate on premium bonds is 1%. Less than inflation.

Effective premium bonds return has been above CPI for a year now....

Voyager2002

col.escargot said:

I've just retired from my job and wanted to pay off my mortgage from my pension lump-sum.  But this will cost me nearly £2k in early repayment charges (which I resent paying!).   However, in 2 years from now I'll be allowed to pay off the mortgage without incurring any fees.

Have you already taken the pension lump sum? Would it not be possible to leave it invested in the hope of further growth?

Otherwise.... as pointed out on this thread there are various risk that you would face from lending to relatives. Surely you could find a blend of stock market-based investments that would present a similar level of risk. Plus, most mortgages allow repayments below a certain amount without charges so see how much you could repay now, and how much in the new financial year, and only invest what remains.

jimjames

dunstonh said:

It is allowed.  However, you are, on paper gifting them the money and reliant on them returning it unless you draw up an agreement.  If they die, it would be assumed to be part of their estate without evidence otherwise.

It would presumably also affect their entitlement to any benefits that have asset restrictions such as if they lost their job or needed to claim for another reason