Borrowing 30K - Mortgage or term loan

Am borrowing 30k to assist in-laws in the completion of their new home. They intend selling their existing home or, if it won't shift easily, renting it out for a period. So they may not be in a position to repay us in the short term. (they're too old too get a mortgage of their own).

Anyway, would be grateful for some advice on whether I (we) would bebetter getting a term loan to be repaid over five years (which would be tough but manageable) or going the top-up mortgage route.

My releuctance to go the latter route is that we have a very nice tracker arrangement at the moment which I wouldn't want to discontine.

Is it possible to get a top-up mortgage while still retaining our existing tracker rate?

Thanks in advance.

It's been a week since I posted this.

Would anyone have a view/answer?

If I apply for a top up mortgage of 30k, would I lose my current tracker rate?

Thanks

Hi Staples, we got a 2nd Mortgage rather than a top-up for 40k this was the min I could borrow,over 5 years. I was reluctant to add 40K onto our existing mortgage
which is 20 years left. I can pay this off sooner if needs be, which is the plan. Repayments on 40k are about 750 per month on a variable rate.

Staples said:

Is it possible to get a top-up mortgage while still retaining our existing tracker rate?

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Only your bank can answer this.
If you can keep your tracker and get a top up over 5 years on a variable rate this would be the cheapest way to finance your borrowing.

Thanks for the replies folks.

In my personal experience, even if you're remortgaging your home (not sure from your post if you're financing on your home or your in-laws) , the bank deal with it as a new seperate mortgage, therefore it shouldn't effect your existing mortgage. However, see * below

Just don't expect to get the new mortgage on the same great terms as your existing tracker. The banks are no longer offering such good tracker loans i.e some banks are offering tracker loans but the tie-in rate to the ECB rate is higher (e.g you might be on ECB+1% on your existing mortgage but a new tracker mortgage for the extra €30k could be ECB+2%)

* You may need to check if; 1) by adding a new mortgage and 2) the reduction in value of your home may effect the loan to value (LTV) ratio to such an extent that it moves you into a different rate bracket (overall).
Example, if your home was valued at €400k and your mortgage was €200k your LTV would have been 50%. Now your home could be worth €350k and your mortgages are €230k your LTV is 66%.

Other cost considerations with the mortgage; your mortgage protection insurance will have to be increased to cover the additional €30k and you may incur solicitor fees


Best of Luck,
[broken link removed]

Bookkeepers said:

Other cost considerations with the mortgage; your mortgage protection insurance will have to be increased to cover the additional €30k and you may incur solicitor fees

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Thanks. I hadn't considered this but as it turns out, there are no fees for top-ups below 65K.