Investment for paying down mortgage
Discussion
Hi all
In brief, when my parents split up an agreement for spousal maintenance was established for one to pay the other until retirement. Part of this involved the mortgage on the family home which was extended to provide the leaving party with funds to purchase their own new home, while the one left behind agreed to pay the increased costs. This new mortgage was interest-only and no plan was established to pay this back.
Over time the remaining party has saved up lump sums to pay this down, but it is still in joint names as his income is not enough to support the full mortgage amount. Every few years they sign for a new rate with the existing lender and pay off a lump at the same time. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends. At this stage, they will most likely either down-size or, if the remaining sum is low enough, I will purchase the house myself so they can stay living there, or they may opt for equity release. We'll have to review the options nearer the time.
Living there means there are two further bedrooms which are let out to lodgers and this provides an income which would otherwise be lost - This is also the reason for staying here for the intervening years, as being in London the income from the rooms is far greater than anything this parent could save by working more hours and downsizing.
I have suggested this money should be invested somewhere better than the back of a wardrobe or fake tin of beans, but at this point am at a loss. Around £1,000 gets put away each month depending on other household expenses and there is around £20k currently put aside. What should I suggest they do with this that 'hides' it from their ex, but also allows them to dip into it should there be a household emergency? Or should they have two accounts, one for long-term and one for the emergencies?
I would appreciate if replies were focused on the investment/future goals rather than any past mistakes or assumptions about which party left. I'm trying my best to salvage a situation I will no doubt be lumbered with in the next decade...!
Thanks.
In brief, when my parents split up an agreement for spousal maintenance was established for one to pay the other until retirement. Part of this involved the mortgage on the family home which was extended to provide the leaving party with funds to purchase their own new home, while the one left behind agreed to pay the increased costs. This new mortgage was interest-only and no plan was established to pay this back.
Over time the remaining party has saved up lump sums to pay this down, but it is still in joint names as his income is not enough to support the full mortgage amount. Every few years they sign for a new rate with the existing lender and pay off a lump at the same time. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends. At this stage, they will most likely either down-size or, if the remaining sum is low enough, I will purchase the house myself so they can stay living there, or they may opt for equity release. We'll have to review the options nearer the time.
Living there means there are two further bedrooms which are let out to lodgers and this provides an income which would otherwise be lost - This is also the reason for staying here for the intervening years, as being in London the income from the rooms is far greater than anything this parent could save by working more hours and downsizing.
I have suggested this money should be invested somewhere better than the back of a wardrobe or fake tin of beans, but at this point am at a loss. Around £1,000 gets put away each month depending on other household expenses and there is around £20k currently put aside. What should I suggest they do with this that 'hides' it from their ex, but also allows them to dip into it should there be a household emergency? Or should they have two accounts, one for long-term and one for the emergencies?
I would appreciate if replies were focused on the investment/future goals rather than any past mistakes or assumptions about which party left. I'm trying my best to salvage a situation I will no doubt be lumbered with in the next decade...!
Thanks.
Keeping that amount of money around the house in cash seems like a terrible idea. Given the intended use, I'd suggest that a cash savings account (or several) would be the best place to keep the money in the meantime.
If the time horizon is long enough then there are potentially more profitable options (shares etc), as long as you don't mind accepting the risk of a substantial loss at some point if you needed the money there and then, and the market is down.
romeogolf said:
Hi all
In brief, when my parents split up an agreement for spousal maintenance was established for one to pay the other until retirement. Part of this involved the mortgage on the family home which was extended to provide the leaving party with funds to purchase their own new home, while the one left behind agreed to pay the increased costs. This new mortgage was interest-only and no plan was established to pay this back.
Over time the remaining party has saved up lump sums to pay this down, but it is still in joint names as his income is not enough to support the full mortgage amount. Every few years they sign for a new rate with the existing lender and pay off a lump at the same time. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends. At this stage, they will most likely either down-size or, if the remaining sum is low enough, I will purchase the house myself so they can stay living there, or they may opt for equity release. We'll have to review the options nearer the time.
Living there means there are two further bedrooms which are let out to lodgers and this provides an income which would otherwise be lost - This is also the reason for staying here for the intervening years, as being in London the income from the rooms is far greater than anything this parent could save by working more hours and downsizing.
I have suggested this money should be invested somewhere better than the back of a wardrobe or fake tin of beans, but at this point am at a loss. Around £1,000 gets put away each month depending on other household expenses and there is around £20k currently put aside. What should I suggest they do with this that 'hides' it from their ex, but also allows them to dip into it should there be a household emergency? Or should they have two accounts, one for long-term and one for the emergencies?
I would appreciate if replies were focused on the investment/future goals rather than any past mistakes or assumptions about which party left. I'm trying my best to salvage a situation I will no doubt be lumbered with in the next decade...!
Thanks.
I think I can guess which one is which.In brief, when my parents split up an agreement for spousal maintenance was established for one to pay the other until retirement. Part of this involved the mortgage on the family home which was extended to provide the leaving party with funds to purchase their own new home, while the one left behind agreed to pay the increased costs. This new mortgage was interest-only and no plan was established to pay this back.
Over time the remaining party has saved up lump sums to pay this down, but it is still in joint names as his income is not enough to support the full mortgage amount. Every few years they sign for a new rate with the existing lender and pay off a lump at the same time. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends. At this stage, they will most likely either down-size or, if the remaining sum is low enough, I will purchase the house myself so they can stay living there, or they may opt for equity release. We'll have to review the options nearer the time.
Living there means there are two further bedrooms which are let out to lodgers and this provides an income which would otherwise be lost - This is also the reason for staying here for the intervening years, as being in London the income from the rooms is far greater than anything this parent could save by working more hours and downsizing.
I have suggested this money should be invested somewhere better than the back of a wardrobe or fake tin of beans, but at this point am at a loss. Around £1,000 gets put away each month depending on other household expenses and there is around £20k currently put aside. What should I suggest they do with this that 'hides' it from their ex, but also allows them to dip into it should there be a household emergency? Or should they have two accounts, one for long-term and one for the emergencies?
I would appreciate if replies were focused on the investment/future goals rather than any past mistakes or assumptions about which party left. I'm trying my best to salvage a situation I will no doubt be lumbered with in the next decade...!
Thanks.
Surely you need a repayment method to obtain an IO mortgage, or are they just saying they'll sell the property at the end of the term?
Croutons said:
Does this count as not just an attempt to defraud, but conspiracy to do so as well?
No. All income is declared, it's entirely down to the individual how that income is spent. It's the second party having sight of that spending which they otherwise wouldn't have if the mortgage were not joint that means they can act out of spite.Sten. said:
I think I can guess which one is which.
Surely you need a repayment method to obtain an IO mortgage, or are they just saying they'll sell the property at the end of the term?
Ugh, I tried...!Surely you need a repayment method to obtain an IO mortgage, or are they just saying they'll sell the property at the end of the term?
No, you can just say you'll sell the property I believe.
romeogolf said:
new mortgage .... over time the remaining party has saved up lump sums to pay this down
Every few years they .... pay off a lump sum. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends.
If the money will eventually be used to pay down mortgage there's little point taking any investment risk with it, just as there's no point stockpiling it under the mattress just to spite the leaver. After all, there's no other plan to deal with the mortgage. Every few years they .... pay off a lump sum. The last time they did this, the leaving party applied to have the monthly spousal maintenance reduce on the grounds that the new mortgage payment is less and therefore less maintenance is required.
To overcome this issue instead of paying lump sums this parent has started to just save it "under the mattress" with the plan to pay as much off as possible when the term ends.
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