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    • Lizzy01
    • By Lizzy01 19th Sep 16, 9:30 PM
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    Lizzy01
    Parents will
    • #1
    • 19th Sep 16, 9:30 PM
    Parents will 19th Sep 16 at 9:30 PM
    I'm so worried about my parents situation. They were badly advised many years ago on an endowment mortgage and there isn't enough money to pay off the mortgage. They are in their 70's and only have a couple of years left until they have to hand back their house that they have lived in for 40+ years. Can anyone advise what they can do. They don't have enough equity (only about 50,000) in the house to buy anything else, so they will be homeless. Thank you Lizzy
Page 1
    • ACG
    • By ACG 19th Sep 16, 9:33 PM
    • 13,183 Posts
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    ACG
    • #2
    • 19th Sep 16, 9:33 PM
    • #2
    • 19th Sep 16, 9:33 PM
    How much is the house valued at?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • csgohan4
    • By csgohan4 20th Sep 16, 7:57 AM
    • 2,163 Posts
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    csgohan4
    • #3
    • 20th Sep 16, 7:57 AM
    • #3
    • 20th Sep 16, 7:57 AM
    how much is the endowment?
    • amnblog
    • By amnblog 20th Sep 16, 8:29 AM
    • 8,646 Posts
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    amnblog
    • #4
    • 20th Sep 16, 8:29 AM
    • #4
    • 20th Sep 16, 8:29 AM
    There is probably a solution here Lizzy, but their incomes, ages, the mortgage size, the endowment value, and the property value are all key.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • AnotherJoe
    • By AnotherJoe 20th Sep 16, 8:39 AM
    • 3,523 Posts
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    AnotherJoe
    • #5
    • 20th Sep 16, 8:39 AM
    • #5
    • 20th Sep 16, 8:39 AM
    It's also too easy to blame "bad advice" when almost certainly they've been ignoring red letters for donkeys years, and never took any action to overpay or move to part repayment, despite an endowment mortgage being cheaper than the equivalent repayment mortgage, leaving them an excess they could have used to overpay and gradually rectify the situation.

    As said once you publish the relevant facts other options may come into play, or maybe they will need to go into rental,

    If they've been there for forty years and only have 50k equity,what have they been doing with the money they haven't been spending on repayments ? It may be they simply couldn't afford this house and should have downsized years back but at least they've had 40 years in it..

    Do you have any financial capability to help ?
    • Lizzy01
    • By Lizzy01 22nd Sep 16, 11:57 PM
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    Lizzy01
    • #6
    • 22nd Sep 16, 11:57 PM
    • #6
    • 22nd Sep 16, 11:57 PM
    It's valued at around 160,000 and they have a mortgage outstanding of 80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.
    • Keep pedalling
    • By Keep pedalling 23rd Sep 16, 12:04 AM
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    Keep pedalling
    • #7
    • 23rd Sep 16, 12:04 AM
    • #7
    • 23rd Sep 16, 12:04 AM
    It's valued at around 160,000 and they have a mortgage outstanding of 80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.
    Originally posted by Lizzy01
    Presumable the endowment will pay some of that 80k off. Even if the short fall is 50% they are going to have well over 100K of equity so they will have no problem renting somewhere if they can't afford to downsize.
    • Thrugelmir
    • By Thrugelmir 23rd Sep 16, 12:11 AM
    • 49,995 Posts
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    Thrugelmir
    • #8
    • 23rd Sep 16, 12:11 AM
    • #8
    • 23rd Sep 16, 12:11 AM
    that they have lived in for 40+ years.
    Originally posted by Lizzy01
    Sounds as if there's more to the tale. A house bought that length of time ago for 80k (?) would be worth more than 160k now.
    A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against a rainy day.
    • Keep pedalling
    • By Keep pedalling 23rd Sep 16, 12:15 AM
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    Keep pedalling
    • #9
    • 23rd Sep 16, 12:15 AM
    • #9
    • 23rd Sep 16, 12:15 AM
    Sounds as if there's more to the tale. A house bought that length of time ago for 80k (?) would be worth more than 160k now.
    Originally posted by Thrugelmir
    Don't think you could get 40 year mortgages back then, so assuming at least one remortgage since then.
    • kingstreet
    • By kingstreet 23rd Sep 16, 7:58 AM
    • 29,645 Posts
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    kingstreet
    Don't think you could get 40 year mortgages back then, so assuming at least one remortgage since then.
    Originally posted by Keep pedalling
    Halifax was offering the Working Life mortgage with a 45 year term in the early/mid 90s.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • AnotherJoe
    • By AnotherJoe 23rd Sep 16, 8:49 AM
    • 3,523 Posts
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    AnotherJoe
    It's valued at around 160,000 and they have a mortgage outstanding of 80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.
    Originally posted by Lizzy01
    That's 80k equity then, not the 50k you stated, plus they should have an endowment policy maturing in 2 years time if they have an endowment mortgage, which will pay off some of that. Even the worst endowment is probably going to pay half that amount. Which leaves only 40k to pay so that's 120k equity, they could therefore do an equity release scheme pay the 40k have a lump sum as well, and even if interest eats that up over the years that should be enough to stay in the house until they die.

    Unless there's some more you haven't said, or your parents haven't told you, and it's your parents who have been reckless rather than suffering from "bad advice" (and merely taking out an endowment say 25+ years ago doesn't count as bad advice). They've had 20 years to plan for this eg since it became apparent endowments would pay out less than most planned for.
    Last edited by AnotherJoe; 26-09-2016 at 2:41 PM.
    • nanny beach
    • By nanny beach 23rd Sep 16, 9:07 AM
    • 31 Posts
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    nanny beach
    You all need to sit down, I agree with other posters, in the 80s my Ex Hubby and I had endowment mortgages because they were a cheaper monthly payment, and the endowment part gave you life insurance, in those days I never hear of one not paying up. If you borrowed 50.000, thats what the endowment was taken out for at the same time. In the 90s, my (now0 Hubby and I took out an endowment to buy our authority property. Two years down the line we got the first "waning" letter it wouldnt pay the mortgage off, we had choices of changing part or all to a re-payment, we moved, after another year. Bought a property for cash (a real doer upper!!!) but carried on paying the endowment, because if we had cashed it in at that point, we wouldnt even have got back what we paid in. We chose a medium cost, which was meant to pay the mortgage off and give us a little extra. We kept an eye on annual letters telling us how much the endowment was worth. We had the option of selling it as well, but desided to look upon it as a savings plan. We finnally cashed it in when we needed the money for renovation. We had countless letters warning us that the endowment would not pay up, but we had paid off the mortgage, mortgage free in 3 years. Everyone said how lucky we were it wasnt luck, and the next property needed EVERTHING doing, didnt even have central heating for several years.
    • Brock_and_Roll
    • By Brock_and_Roll 23rd Sep 16, 9:17 AM
    • 680 Posts
    • 638 Thanks
    Brock_and_Roll
    Of course it entirely depends on where the house is, however, according to ONS figures, prices on average have risen 126% (1975-2014) so on the face of it a property costing 80k (i.e. a 1005 mortgage) or so may well for 160k-180k now.


    Anyway, there should on the face of it be enough equity for some kind of lifetime mortgage so no one needs to panic at this stage. Why is the title of the post "parents will" - what has their will got to do with all this?
    • vacheron
    • By vacheron 23rd Sep 16, 9:49 AM
    • 589 Posts
    • 503 Thanks
    vacheron
    Of course it entirely depends on where the house is, however, according to ONS figures, prices on average have risen 126% (1975-2014) so on the face of it a property costing 80k (i.e. a 1005 mortgage) or so may well for 160k-180k now.


    Anyway, there should on the face of it be enough equity for some kind of lifetime mortgage so no one needs to panic at this stage. Why is the title of the post "parents will" - what has their will got to do with all this?
    Originally posted by Brock_and_Roll
    Are you sure? My parents bought their house in 1977 for 14,000 and it's now worth about 180,000 126% would make it currently worth 31,650?
    The rich buy assets.
    The poor only have expenses.
    The middle class buy liabilities they think are assets.
    Robert T. Kiyosaki
    • chelseablue
    • By chelseablue 23rd Sep 16, 10:57 AM
    • 1,759 Posts
    • 2,248 Thanks
    chelseablue
    Are you sure? My parents bought their house in 1977 for 14,000 and it's now worth about 180,000 126% would make it currently worth 31,650?
    Originally posted by vacheron
    I agree, my parents bought their house in 1997 for 62,000, house across the road sold last month for 389,000
    Baby Boy born May 2014

    Mortgage starting balance Feb 2016 231,294
    Savings 11,500

    Save 12k in 2016 Challenge - Member #36
    • Apodemus
    • By Apodemus 23rd Sep 16, 12:24 PM
    • 200 Posts
    • 129 Thanks
    Apodemus
    I agree, my parents bought their house in 1997 for 62,000, house across the road sold last month for 389,000
    Originally posted by chelseablue
    The quick data I can find on ONS for UK average prices only goes back to 1990 and shows a 490% increase between 1990 and 2016. Some areas will, of course, have done better and some worse over that period.
    • Marmaduke123
    • By Marmaduke123 23rd Sep 16, 1:41 PM
    • 372 Posts
    • 359 Thanks
    Marmaduke123
    We paid 26,000 for our house in 1978. Houses in our road are going for just shy of 500,000
    • Richey_
    • By Richey_ 24th Sep 16, 6:57 AM
    • 61 Posts
    • 82 Thanks
    Richey_
    You all need to sit down, I agree with other posters, in the 80s my Ex Hubby and I had endowment mortgages because they were a cheaper monthly payment, and the endowment part gave you life insurance, in those days I never hear of one not paying up. If you borrowed 50.000, thats what the endowment was taken out for at the same time. In the 90s, my (now0 Hubby and I took out an endowment to buy our authority property. Two years down the line we got the first "waning" letter it wouldnt pay the mortgage off, we had choices of changing part or all to a re-payment, we moved, after another year. Bought a property for cash (a real doer upper!!!) but carried on paying the endowment, because if we had cashed it in at that point, we wouldnt even have got back what we paid in. We chose a medium cost, which was meant to pay the mortgage off and give us a little extra. We kept an eye on annual letters telling us how much the endowment was worth. We had the option of selling it as well, but desided to look upon it as a savings plan. We finnally cashed it in when we needed the money for renovation. We had countless letters warning us that the endowment would not pay up, but we had paid off the mortgage, mortgage free in 3 years. Everyone said how lucky we were it wasnt luck, and the next property needed EVERTHING doing, didnt even have central heating for several years.
    Originally posted by nanny beach
    Bragging about your own gains is hardly going to either help OP or make them feel better.......
    • Kynthia
    • By Kynthia 24th Sep 16, 8:17 AM
    • 4,458 Posts
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    Kynthia
    Bragging about your own gains is hardly going to either help OP or make them feel better.......
    Originally posted by Richey_
    I think the point wasn't to brag but the fact that when things changed and endowments were no longer going to pay off the mortgage there was lots of warning and communication. So therefore the OP's parents must have had decades to act and haven't. Well that's how I read it.
    Don't listen to me, I'm no expert!
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