I agree entirely with @gettingtheresometime that this really needs to be discussed with both your son and his girlfriend. I'd also warn against bailing them out, mainly because it could mean all they learn from this situation is that you'll bail them out again in future. Have a look at the Debtfreewannabe board here - and try to get the young couple to do the same. If they recognise that they have problem debt then point them towards the debt advice charities recommended by MSE - StepChange, CAB, National Debtline, Tec - being careful to ensure not to use any similarly named fee-charging companies.It's likely this loan isn't the only debt they have so it's important to deal with everything as a whole. It's also unfortunately likely that their house purchase plans may need to be postponed as mortgage lenders will look at credit utilisation when making their lending decisions.
A bit too trusting (and naive) I'm afraidIt would have been better if you were charging the full rate, whatever that is - and then saving the discount yourself as part the money needed for the mortgage. If it all falls through, you still have the money. As it stands you have no guarantee they have been saving that discount, or they won't spend it. Your son could split with his girlfriend and all that would have happened is that she has had cheaper accommodation.If you want to be the 'Bank of Mum and Dad' then the best way is to act like a bank. Harsh, I know, but I have seen too many fall outs in families over money.
Was the letter left deliberately for you to 'accidentally' see it? However this happened, the issue will have to be addressed and it's likely to be a difficult conversation. It's unlikely that they're spending on socialising at the moment, so it's a worry where they money is going.
How to make yours spendable again
Lower your band & save £1,000s
Including year's 2for1 movies for £1