overpayments 4 January at 11:22PM in Mortgages & endowments 5 replies 453 views

TorkseyFern

Hi can anyone give me some advice in relation to the following which I will try to keep very simple. I need to help my daughter with her mortgage it was taken out for 110k against a property worth 125k. Fixed deal has ended so can I help her reduce the mortgage debt to around 40k without her being penalised by the lender who is Barclays. The 70k I am helping her with can be dealt with at a later time and is not a gift but loan to tide her over till rates hopefully return back to some normality. Barclays have stuck her on the SVR of 6.99. There are fixed deals available through Barclays around the 3 to 4% mark. Can she get one of those as well as reducing the amount of mortgage left to pay being only 40k. Any help appreciated.

jrawle

If the fixed deal has ended, you are free to take out a new mortagage with any lender. You can pay off as much capital as you like at this point. As the new mortgage will be a low LTV, it should be no issue to obtain a new mortgage. I suggest using a comparison site to see what rates are available for a £40k loan on a £125k property.

Sg28

"tide her over till rates hopefully return back to some normality"

They are returning to normality. Which ~4-5% base rate.

I wouldnt count on them going back down near 0

Khaderbhai

Yes but key is to make the overpayment before you ask to fix in a deal. The overpayment is what will unlock the more competitive rates.

dimbo61

You need to consider this carefully.
Do you have only the one daughter ?
Can she get a £100,000 mortgage at current rates ?
Have you looked at Offset mortgages with YBS ? 
You daughter takes out an Offset mortgage and you put money into an Offset savings account saving her interest on her mortgage.
We don't know why you want her to have a £40,000 mortgage ! ( drop in income )

TorkseyFern

Thanks for all your comments, We can get her on a new fixed deal which will soften the blow of the rate hikes. The offset mortgages mentioned are normally only available if you have a low LTV. The 70k payment opened up the fixed rates to her which is good enough for now. If anything else comes up in the mean time I will post further. I hope it doesn't so perhaps in 5yrs time I can update you as to how it all went. Cheers.