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Original poster

£50,000 Personal loan to help parents pay off mortgage

93 replies

SleepDreamThinkHuge · 09/07/2023 18:42

Good Evening,

My parents have a house which they will give to me in the future (next 10 years in writing will). They have some savings and need another £50,000 to pay off fully the mortgage. I am willing to take out the £50,000 loan over 8-10 years as this will be my house in the future and it saves me a lot of money in the long run. The lender said they need to find £50,000 within 6 months where their mortgage term ends or they will be forced to sell the house which is not ideal as the area is really good and could easily double in the next 10-15 years.

Are there any banks that give personal loans without asking for the reason? Can you use it for other debt consolidation such as this case. My salary is around £35k.

OP posts:
TomatoSandwiches · 09/07/2023 19:01

Did they always plan to have you bail them out of their poor financial decisions?
The final payment isn't a surprise, so why did they not take an endowment policy out?

Cornishclio · 09/07/2023 19:02

This makes no sense. Do you have a mortgage already for your own home? Firstly there is no guarantee you will get the house any time due to possible care costs for your parents and you may or may not eventually get the property. If you do this I would protect your investment with a deed of trust. Effectively you are putting your own life on hold until the loan is paid off or your parents die and there is no sign of interest rates reducing. They may in fact go higher.

You will struggle to get an unsecured loan for that amount especially on an average salary. I strongly suggest you seek legal advice before going further.

SlightlygrumpyBettyswaitress · 09/07/2023 19:02

They don't need to. They could an equity release to clear the capital. Or sell.
Do not tie yourself up in this. You have modest earnings and are likely just to put yourself into the hole they have dug.

wheretoyougonow · 09/07/2023 19:07

This could be a nightmare. You are not guaranteed this house. Care home fees have been mentioned but there are other scenarios that could leave you without the house. One parent could die and the other remarries and uses the money to move elsewhere. Everyone says 'my parents would never do thay' until they do.....

QueenFree · 09/07/2023 19:08

You can't use a loan to pay off a mortgage. They'll check your details to see where the money has come from if you announce the payment as a 'gift'.

This is a very risky proposal

MammaTo · 09/07/2023 19:17

SleepDreamThinkHuge · 09/07/2023 18:49

Can you transfer mortgages to another person without incurring large fees e.g. stamp duty, inheritance tax etc..?

Show quote history

No the mortgage needs to be assessed for affordability in your own name. You’d need to take the mortgage out and pay off your parents mortgage with the money.

Toastfortwo · 09/07/2023 19:18

Do you have a mortgage?

How old are your parents (roughly). You say one is a pensioner and the other does not work. Can the non worker work full time and take out a 10 year repayment mortgage? Assuming they are say 60? Will their lender extend their term on an IO basis and you overpay on it for 10 years - unlikely but depending on the lender it may be an option.

Why did they elect not to overpay on it? (You can overpay on Interest only). Was their plan to downsize? What has changed?

Have they looked at RIo mortgages? They are not the same as equity release.

Caramellois · 09/07/2023 19:25

This is not a good idea. You might fall out with your parents. Their house might have to be sold for care fees. They might remortgage once you have helped them pay off the current mortgage. The fact that they are in this situation suggests that they are not good with money. There is no certainty whatsoever that you will acquire the house. If they do give you the house this raises all sorts of issues regarding deprivation of assets and care home fees.

You would tie yourself down with a large loan for which you would be liable while perhaps never getting the property. A personal loan, if you could even get one, will have a higher rate of interest than a mortgage. I don't think there is anything to stop you using a personal loan for property but it is just that most property lending is secured by the mortgage over the property but you don't own the property and might never own the property.

If you own a property of your own, I don't think that you should be securing the mortgage over your home and risking your home to save your parents' home.

This is the kind of thing that makes solicitors reach for their smelling salts. It is incredibly unwise. I would advise any client in the most strenuous terms not to do this. You absolutely should take legal advice from a solicitor.

unsync · 09/07/2023 19:31

Take a mortgage for £50k in exchange for part ownership now.

123sunshine · 09/07/2023 19:32

Terrible idea for you to take out a loan for all the reasons and more listed above. If they don’t want to sell and downsize, I would suggest that they look at an interest only equity realises mortgage, which will not be assessed on their affordability. If they can afford it they can service the interest, as they are doing currently so the loan doesn’t roll up and become bigger. Though if they need to stop servicing interest that can also be done at any time. The interest rate will be higher than what they are currently paying, but this looks like the most feasible option.

rainingsnoring · 09/07/2023 19:39

This would be an insane thing to do for various reasons which have been discussed.
If your parents won't work to cover the loan (you haven't said they can't), they will need to downsize to something smaller.

Summerfun54321 · 09/07/2023 19:39

Get proper advice.

ActDottie · 09/07/2023 19:41

That’s such a massive risk when you may not end up with the house. Just don’t do it. As others have suggested can they transfer to your name and you get a mortgage or can you buy it from them for a reduced price and get a mortgage that way.

meddysam · 09/07/2023 19:41

this is crazy.
can they downsize?

InSpainTheRain · 09/07/2023 19:42

You definitely need legal advice OP. There is no guarantee the property will become yours - it could be taken for care home fees for example or other debt you are not aware of (even if you think your parents have been entirely honest with you). What would your plan to pay it off be? 50k is a lot if you are on 35k and you also have to rent your own place and live on that salary.

Namechangedforthis2244 · 09/07/2023 19:43

unsync · 09/07/2023 19:31

Take a mortgage for £50k in exchange for part ownership now.

This is excellent advice.

LadyTemperance · 09/07/2023 19:46

Unless there is great emotional feeling toward this property it should be sold and your parents downsize. This is the consequence of interest only mortgages.
In your shoes I would not just gift them 50k from a loan in your name. There is no guarantee there will be that much left in their estate after care fees.
It may be possible for you to own a percentage of the property but you need legal advice regarding stamp duty etc.
Also do you live with them?

BarbaraofSeville · 09/07/2023 19:48

What is the house worth and what is their total income? If one is a pensioner and one doesn't work, are they entitled to any benefits due to ill health, also pension credit etc? How old are they When will your younger parent reach pensionable age? Does either of them have a private pension?

If they top up their income, could they afford to pay a £50k mortgage - two lots of state pension alone is £21k or nearly £1800 pm and a £50k mortgage will be around £3/400 pm, so could be affordable and you can get mortgages to run past retirement age now, which makes sense as income from pensions is guaranteed, unlike salaries.

Viviennemary · 09/07/2023 19:49

I thin this needs to given a lot of thought before you take out this loan. In any case I doubt you would get an unsecured personal loan of £50k on your salary. There is no way you can absolutely rely on you being givem that prooerty in the future. What are the arrangements for the repayment of the loan. Actually on second thoughts it would be total madmess.

Luhou · 09/07/2023 19:49

You won't get a loan for 50k on a 35k salary. We have a household income of upwards of 100k and have just managed to borrow 25k for an extension.

RandomMess · 09/07/2023 19:49

You could get a mortgage to buy a share in the house

Badbudgeter · 09/07/2023 19:50

Why can’t they sell a proportion of the house to you and you take out a mortgage on that?

personally I think an unsecured loan would be nuts.

Jobreveal · 09/07/2023 19:53

For all the reasons stated above
this is a terrible idea. I also would not want to become financially entangled with people who seem to be clueless about finances. Did they not make any plans for clearing the capital or did they just bury their head in the sand?

greyhairnomore · 09/07/2023 20:03

What about care home fees if they need them ?

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