Loan vs Morgage

BrokenOwl

Me and my partner bought a house together with help from my parents so we have no mortgage. 

Me and my partner are listed equal on the deeds and have a verbal agreement that should circumstances change any sale of the house would pay back my parents first and foremost.

Now I need to pay my parents back as circumstances have changed and I need to get the money to them in bulk, giving them monthly amounts isn’t an option. 

I need approx £100k is it better to get a  a secured personal loan or an unencumbered loan? 

Our only other issue is that we are earning very little at the moment we own our own business and to keep the business going we took the hit and reduce both our earnings to just over £1k a month each. (We don’t claim any benefits) 

We’re trying to figure out which is the best option for us given our circumstances. 

Hoenir

With minimal earnings you've zero possibilty of borrowing a £100k. 

cantbelieveit23

Hoenir said:

With minimal earnings you've zero possibilty of borrowing a £100k. 

I would guess (without knowing your exact income) that the other alternative of now mortgaging your house is also out of the question?

I think you are in a very difficult situation.  Easy in hindsight, but it may not have been wise to enter the arrangement with your parents for such a large sum, when circumstances can change suddenly.  They should perhaps have followed "don't loan what you cannot afford to lose" rule.  We helped out one of our children with a mortgage by loaning around half your figure, with repayments monthly over 5+ years.  It was a risk (one that we calculated we could take, given their salaries), but that additional monthly income has worked out well for us, and the last repayment will be made later this year.

Of course, your arrangement has saved money in mortgage interest, but the result has been that £100k "cash" is now trapped in the value of your house.  Difficult to see an obvious solution, especially as you don't have fixed income in the form of salaries from permanent employment.

Keep_pedalling

You could speak to a mortgage broker to see what sort of mortgage you could obtain, any shortfall is something your parents are going to have to live with, and it is something they should have taken into account when they made the loan. When we have lent our children money we have done so with accepting the risk that we might not be able to get it back. If we could not have afforded to do that we would never have made the loan.