Hi guys,
I’m new to this forum so bear with me…I’m trying to help out my folks with finance. There current situation…. they took out credit to finance 2 trips to Europe Germany in the last three years (they haven’t seen relies in 30years).
They have payed off there property about 8 years ago which has a market value of around $190-200,000 here in Adelaide.
They have $20,000 against their home paying $250 a month as well as a credit card debt of $20,000. With the credit card they pay around $600 a month. They are both now on pensions so income is very tight.
What would be the best choice for them regarding there situation as i know credit card interests rates are very high (they pay 15%/annum).
They would still like to draw out some money from time to time… any suggestions?Thankyou,
Regards
Peter.G’day Peter…
Tough to give any precise answer without all info.
However, some suggestions…
Depending on your situation…Could you help out as guarantor/co-borrower ? That wpould increase their borrowing power. Maybe they can simply consolidate the debt @ 6.5%….the annual interest bill would only be $3,250…$270 month.
I would encourage them to make an appt. ( you could go with them)explain the situation and take out a first mortgage of about $50,000…and cut up the plastic.
Perhaps …$40,000 P&I and a $10,000 Line of credit…they only pay interest on the LOC if and when used. If that is only going to be a future problem like thhe plastic….Get $50,000 P&I.
Depending on their ages…St. George and others will give an advance of app. 30% of value ($60,000) that is repaid on death or when home vacated….probably a last resort…but an option.
Best of luck…I’m sure some of the Brokers on the forum will have other ideas for you as well.
Even if rates went to 8.5%…interest on $50,000 is just $4,250 per annum. Compared to what they are paying now…they should be able to refinance with a first Mortg. with any/all lenders.
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Thankyou Bill, that is kinda what i thought….
Dad has just turned 54 a couple of days ago, mums 53 and their combined monthly income is around $1200-1400. I help them out occasionally as much as i can with bills.
I wasn’t sure what fees for refinancing and/or applying for another loan is needed.
I thought about seeing an accountant/advisor for some advice but as i’m a final year Uni student my income is fairly tight as well.I told them to cut up the plastic long ago but they didn’t agree saying they still need to withdrawl cash from time to time (usually to save their pension to pay for loans, bills etc.
So if i were to advise them to extend their $20,000 home refinance loan with westpac to pay for the other $20,000 on the credit card(with westpac again) and take out $10,000 or $5000 LOC… what fees do they need to pay and by how much are they better off? Do you agree with this?
As i stated before, they pay $250 a month on the $20,000 loan against their house as well as $600+ on their credit card (figures are approximate, actually a bit less then $20,000). If you need any other info please let me know.
I appreciate the time you’ve taken and value your opinon/suggestions greatly,
Regards
Peter.Peter
Even if there are fees, you could pay them out of the re borrowings. If they only earn $1200-1400 per month, and are paying $850 per month in loan payments – ouch!! If the do refinance, they should try to pay more than the minimums though – especially if they want to start spending on the plastic again!!
Cheers
MelPeter…
Don’t worry about the fees mate.
AS Mel said the fees can come out of the loan.
Given the BIG payments for your Mum & Dad, I suggest you make an appt with Westpac and perhaps go with them asap.
Just put yourcards on the table and take evidence of the payments they have made each month unless already with Westpac. Don’t leave it until they can no longer pay…then the damage is done.
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Thought id just reply to thank you Bill and Mel for helping me out.
They are now living much more convertably, the manager at Westpac was very helpfull too. I guess you don’t here that too often!All the best for the future….
Regards
Peter.G’day Peter…
I’m sure Mel will be as pleased as I am to hear the good news. Westpac Mgr helpful too.. most people are Peter…it’s just the Ba*****sthey have to work for is the problem.
I am interested to know if you went along with them and what sort of deal they gave your Mum & Dad?
I commend you for helping them out with bills etc’after all that’s what family is all about.
Also appreteciated your thank you.
Let us know the arrangements they offered as it may help me with future questions ont he Forum.
What’s your biz Peter?
Cheers and wish you and your Mum & Dad well
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]
The topic ‘Advice for my folks’ is closed to new replies.
