mortgage free wannabee advice needed!:)

blushingbride_3

Hi
I currently have a barclays fixed rate tracker mortgage since 2006. I want to 0pay this off quickly and as i am getting married in 4 months we will have more money avaliable

I think it is 0.9% above base rate.

I also owe my parents £44K because they helped me get the house. was thinking i can stool the regular payments to them and just over pay the mortgage which means we can clear it in 4years!:) (so long as no babies appear!)

was chatting to dad and he said maybe because i have a good rate mortgage it would be better to pay my debts to him at the same time because the mortgage is a low rate?

Not sure what to do now, could still over pay £500 and pay mum and dad £500 but this will only reduce the mortgage to 7 years rather than 4.

Lok forward to replies!:)

katie

Dithering_Dad

To be honest, I'd view the debt to my parents as a much higher priority than the debt to the bank, and so would overpay this as much as possible until it was paid off. Then I'd turn my attention to the bank mortgage.

blushingbride_3

Thanks dithering dad,
anyone else got any advice?

Ma77hew

No offence but I think it would be taking the biscuit to ask your mum and dad to wait for their money after they've helped you out.

You would be benefiting from lower interest payments but lets not forget that they are losing out on interest payments which is in effect a cost to them (Plus money depreciates in value).

You should at the very least pay them back what you agreed when they lent you the it.

Just my opinion.

blushingbride_3

we didnt have an agreement and they dont mind which way we do it.
yes they helped me but they still want to help me and would rather i used the most beneficial method, they arent in a hurry for the money.

Katie

jamesd

katie, what interest rate are you paying your parents for the money you owe them? If you are considering repaying the mortgage first you should be looking to pay them at least the same interest rate as they would get from a savings account after tax.

Your father's maybe comment is best taken as a hint that they aren't entirely comfortable and you'll still be way better off paying them an after tax interest rate.

You should also consider what happens in the event of divorce and ensure that the legal ownership of the property is clear. That could mean making sure that the split of value recognises your initial contributions, including that of your parents, and only splits the value of the payments since marriage.

blushingbride_3

yes i am getting legal documents drawn up with regards to the marriage so that in the event of divorce the 50% share i currently have in the house will not be split.

I understand what you are saying about payin my parents, nothing was said about interest so i am not sure what they are expecting.

At present my mortgae is £450 and i pay them about £400.

With me and H2B's incomes we would get £2100 a month so could afford to pay £750 on mortgage and £750 to mum and dad?

Katie

or mum and dad are happy to wait 4-5 years until we move and get there money in a lump sum, so then would it benefit me paying the mortgage quicker?

Daft_Pegasus

If I were you I'd talk openly and honestly with my parents about it. You've been fortunate that your parents can afford to lend you a lot of money to help you out, therefore I'd be making my decision based on what I thought they wanted me to do.

Kaz2904

I would say that it sounds like your Dad wants the money back from his comment.
Definately sit down and have a chat with them and try to put any emotion out of the way. They've lent you an awful lot of money and TBH 7 years isn't too long to be taking to clear the mortgage.
If you cleared your mortgage before you repaid them how long would it take for you to repay them?
Best bet is to run some scenarios through www.whatsthecost.com/snowballs.aspx and show them. Then let them pick the scenario they are most comfortable with.
It will be a weight off your mind when you actually know what they want you to do and you have a clear plan.

firesidemaid

if they have lent you 44k then they are losing out on over 2k worth of interest per year - that is more than 10k over 5 years!

i too have borrowed money from my parents for a house in the past and i made it clear to them for how long i was borrowing ie. when it would be paid back by, whether lump sum or regular payments.

make sizeable repayments - have they already filled their isas for year? if not, give them 3k each to put into one for a start - or pay it into one for you and then pay them the money plus interest.

good luck x

iieee

Paying off an entire mortgage in 7 years is still pretty good going! So I'd agree with other posters, it would be fairer to pay your parents off ASAP rather than make them wait till the mortgage is paid off. What if you have a baby in 4 years, give up work, and suddenly can't afford to pay them back at the same rate any more? It's not really fair on them.