Hey everyone,
I have some family members who are not the best at managing money. They already owned their house outright but took a LOC and spent $100K on more or less useless things like stocks that went bad, basement renovation, etc.
So now they have a $100K debt on LOC at 3% interest (variable prime). Not bad but in the past 5 years they have not paid it down at all. Just the interest.
They are retired with a pension.
I have since recommended that they look into getting a $100K mortgage instead so that it forces them to pay it down as it doesn't seem like they will do it on their own.
They seem inclined.
I'm thinking with a $500K house and only a $100K mortgage, they should be able to get a great rate. Maybe 3% 5 year fixed or something.
So my questions are:
1: Is this a smart move to make for them?
2: If it is, what do you recommend as a mortgage and a rate given that they are only borrowing 20-25% of the value of their home.
I have some family members who are not the best at managing money. They already owned their house outright but took a LOC and spent $100K on more or less useless things like stocks that went bad, basement renovation, etc.
So now they have a $100K debt on LOC at 3% interest (variable prime). Not bad but in the past 5 years they have not paid it down at all. Just the interest.
They are retired with a pension.
I have since recommended that they look into getting a $100K mortgage instead so that it forces them to pay it down as it doesn't seem like they will do it on their own.
They seem inclined.
I'm thinking with a $500K house and only a $100K mortgage, they should be able to get a great rate. Maybe 3% 5 year fixed or something.
So my questions are:
1: Is this a smart move to make for them?
2: If it is, what do you recommend as a mortgage and a rate given that they are only borrowing 20-25% of the value of their home.