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  • FIRST POST
    • debsyb23
    • By debsyb23 12th Mar 18, 2:38 PM
    • 1Posts
    • 1Thanks
    debsyb23
    Tricky Interest Only Conundrum!
    • #1
    • 12th Mar 18, 2:38 PM
    Tricky Interest Only Conundrum! 12th Mar 18 at 2:38 PM
    Thank you for taking the time to read this post.

    My partners' parents bought a flat for him which is paid for outright however his parents have taken out a 10yr interest only mortgage for 60k on their own property to do this and no one is saving for the capital which means the flat would need to be sold to pay of the 60k in 10 yrs time or in the event of his father passing (lets hope thats not the scenario!). This has come to light as my partner was planning to move in with me and then all this came out. We were planning to use the flat rental money to buy a boat and go on an adventure! He is currently paying his parents 150 a month which we now understand is paying the interest only monthly fee.

    I think it makes sense to see what we can do and hold on to the flat for long term security/pension. My partner is unlikely to get a mortgage so that won't work. I have a mortgage on my flat for 132k (valued at 185k) and I earn 37k maybe I could get another mortgage? Would it need to be a BTL, then where do I stand in terms of tax? Could his parents get a repayment mortgage that we pay - his dad is 74. The flat in question is valued at 125k. Or do we just start putting money aside and pay the interest only as well if we can? Not sure what makes most financial sense. However neither of us really want to be tied to using all our earnings to pay for the 60k over the next 8-10 years.

    Thank you all thoughts appreciated, I'm not very good at finance!!
    Dx
Page 1
    • TrickyDicky101
    • By TrickyDicky101 12th Mar 18, 2:48 PM
    • 3,007 Posts
    • 1,943 Thanks
    TrickyDicky101
    • #2
    • 12th Mar 18, 2:48 PM
    • #2
    • 12th Mar 18, 2:48 PM
    If you don't want to be restricted through needing to raise loan repayments, why not sell the flat and give his parents the money back? I'm afraid I don't follow your reasoning of wanting to keep it if it will be a burden.
    • Typhoon2000
    • By Typhoon2000 12th Mar 18, 2:49 PM
    • 859 Posts
    • 420 Thanks
    Typhoon2000
    • #3
    • 12th Mar 18, 2:49 PM
    • #3
    • 12th Mar 18, 2:49 PM
    Assuming the flat is in your partners name, the best way it would seem is for him to get a 60k Mortgage on the flat and pay his parents off.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Mar 18, 3:07 PM
    • 6,403 Posts
    • 13,180 Thanks
    enthusiasticsaver
    • #4
    • 12th Mar 18, 3:07 PM
    • #4
    • 12th Mar 18, 3:07 PM
    Your partners parents are too old to get another mortgage. I am amazed they got an interest only one too as they are difficult to come by now.

    I am not a lover of BTL so personally would sell it.

    The only way you could raise the money is either for your partner to take a mortgage out on the flat to repay the 60k on his parents mortgage but you say he cannot get a mortgage. Why not?

    If you raise the money on your property you will need some safeguards in place so you need legal advice on this. Maybe a charge on his mortgage free flat? Your lender may not be willing to lend for this purpose though so you may need to change lenders. Your partner moving in with you has its own issues too though so again legal advice is recommended as he may have a claim on your property.

    All in all it is not simple unless you just sell the flat and repay the 60k to your partners parents and use the balance to either invest or use to buy a boat
    Debt free and mortgage free and early retiree. Living the dream

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    • getmore4less
    • By getmore4less 12th Mar 18, 3:20 PM
    • 32,035 Posts
    • 19,223 Thanks
    getmore4less
    • #5
    • 12th Mar 18, 3:20 PM
    • #5
    • 12th Mar 18, 3:20 PM
    Thank you for taking the time to read this post.

    My partners' parents bought a flat for him which is paid for outright however his parents have taken out a 10yr interest only mortgage for 60k on their own property to do this and no one is saving for the capital which means the flat would need to be sold to pay of the 60k in 10 yrs time or in the event of his father passing (lets hope thats not the scenario!). This has come to light as my partner was planning to move in with me and then all this came out. We were planning to use the flat rental money to buy a boat and go on an adventure! He is currently paying his parents 150 a month which we now understand is paying the interest only monthly fee.

    I think it makes sense to see what we can do and hold on to the flat for long term security/pension. My partner is unlikely to get a mortgage so that won't work. I have a mortgage on my flat for 132k (valued at 185k) and I earn 37k maybe I could get another mortgage? Would it need to be a BTL, then where do I stand in terms of tax? Could his parents get a repayment mortgage that we pay - his dad is 74. The flat in question is valued at 125k. Or do we just start putting money aside and pay the interest only as well if we can? Not sure what makes most financial sense. However neither of us really want to be tied to using all our earnings to pay for the 60k over the next 8-10 years.

    Thank you all thoughts appreciated, I'm not very good at finance!!
    Dx
    Originally posted by debsyb23

    Use it to start overpaying the debt if you want to keep the flat.


    What sort of boat you could have got for an adventure with 300-400pm?
    • fewcloudy
    • By fewcloudy 12th Mar 18, 3:37 PM
    • 223 Posts
    • 116 Thanks
    fewcloudy
    • #6
    • 12th Mar 18, 3:37 PM
    • #6
    • 12th Mar 18, 3:37 PM
    Thank you for taking the time to read this post.

    My partners' parents bought a flat for him which is paid for outright however his parents have taken out a 10yr interest only mortgage for 60k on their own property to do this and no one is saving for the capital which means the flat would need to be sold to pay of the 60k in 10 yrs time or in the event of his father passing (lets hope thats not the scenario!). This has come to light as my partner was planning to move in with me and then all this came out. We were planning to use the flat rental money to buy a boat and go on an adventure! He is currently paying his parents 150 a month which we now understand is paying the interest only monthly fee.

    I think it makes sense to see what we can do and hold on to the flat for long term security/pension. My partner is unlikely to get a mortgage so that won't work. I have a mortgage on my flat for 132k (valued at 185k) and I earn 37k maybe I could get another mortgage? Would it need to be a BTL, then where do I stand in terms of tax? Could his parents get a repayment mortgage that we pay - his dad is 74. The flat in question is valued at 125k. Or do we just start putting money aside and pay the interest only as well if we can? Not sure what makes most financial sense. However neither of us really want to be tied to using all our earnings to pay for the 60k over the next 8-10 years.

    Thank you all thoughts appreciated, I'm not very good at finance!!
    Dx
    Originally posted by debsyb23
    So you two have a flat (that is already worth 125k) but need to pay 60k toward it, and over 10 years? You also want a boat/adventure, and you want a pension.

    Maybe you need to prioritise which of these things comes first and how much you are both prepared/able to pay toward this each month.
    Feb 2008, 20year lifetime tracker with Sprogget and Sylvester, 0.14% + base for 2 years, then 0.99% + base...
    • silvercar
    • By silvercar 12th Mar 18, 5:12 PM
    • 37,234 Posts
    • 156,857 Thanks
    silvercar
    • #7
    • 12th Mar 18, 5:12 PM
    • #7
    • 12th Mar 18, 5:12 PM
    The parents have the option of taking an equity release mortgage in 10 years time. May effect the inheritance in the future, but it would enable you to have your cake and eat it.
    • AnotherJoe
    • By AnotherJoe 12th Mar 18, 6:14 PM
    • 9,426 Posts
    • 10,425 Thanks
    AnotherJoe
    • #8
    • 12th Mar 18, 6:14 PM
    • #8
    • 12th Mar 18, 6:14 PM
    The parents have the option of taking an equity release mortgage in 10 years time. May effect the inheritance in the future, but it would enable you to have your cake and eat it.
    Originally posted by silvercar
    Seems a bit cautious and won't buy a boat right now which is obviously important,you can hardly expect them to wait ?!

    How about parents sell house, pay off flat, move into flat and give the money to kids to enable a decent boat.
    And if kids run out of money they can wire back to parents who each have a spare kidney that's probably worth a fair bit.
    Last edited by AnotherJoe; 12-03-2018 at 6:17 PM.
    • John-K
    • By John-K 12th Mar 18, 11:16 PM
    • 654 Posts
    • 1,011 Thanks
    John-K
    • #9
    • 12th Mar 18, 11:16 PM
    • #9
    • 12th Mar 18, 11:16 PM
    I am reminded of the scene in the Shawshank Redemption where the guard is complaining about the tax he will have to pay on his windfall.
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