Any mortgage brokers there for advice? House will go up for sale tomorrow..... :-(

willing2learn_3

This is my last ditch attempt to see if i can help my parents sort out their financial situation.

I've posted elsewhere, under the debt free wannabee forum....

The situation is that my parents are going to put their house up for sale tomorrow and i don't know if they are doing the right thing.

They have £49,000 left to pay on the mortgage....unfortunately though dad took out a loan against the house and also has £66,000 to pay back on that. They have about £1800 to pay every month and that's before other payments like council tax, etc....

They are struggling but i think dad wanted to wait a couple of years before selling....originally.

I contacted an independent mortgage broker for them but they haven't got back to him after he said he would need £200 up front to value the house and check their payment history.

They did try to get a remortgage with another company (not independent) and they said they were unable to help but would reconsider in 6 months.

My mother is now saying they don't want a remortgage anyway because it would mean another £100,000 to pay and it would put them in negative equity.

I don't really understand all this, i just hope they are doing the right thing.
Please anyone, any advice or comments would be appreciated.....or anything that you think they ought to consider before tomorrow.

Thanks for listening

W2L

silvercar

I'm sure people will be along to offer advice soon. In the mean time, giving an idea of the property value would help. Also the ages of your parents and their expected retirement age. and an idea of their income.

My mother is now saying they don't want a remortgage anyway because it would mean another £100,000 to pay and it would put them in negative equity.

Your mother doesn't understand that the mortgage would presumably be to consolidate the existing mortgage and loan. What was the purpose of the loan? Is the house in joint names? If it is, and the loan purpose was in connection with a business of your father, was your mother advised to take independnat advice before agreeing to securing the loan on the property? If not then etridge vs. RBS may apply.

willing2learn_3

silvercar wrote: »

I'm sure people will be along to offer advice soon. In the mean time, giving an idea of the property value would help. Also the ages of your parents and their expected retirement age. and an idea of their income.



Your mother doesn't understand that the mortgage would presumably be to consolidate the existing mortgage and loan. What was the purpose of the loan? Is the house in joint names? If it is, and the loan purpose was in connection with a business of your father, was your mother advised to take independnat advice before agreeing to securing the loan on the property? If not then etridge vs. RBS may apply.

Thanks Silvercar

I'm exhausted and i didn't even have the energy to post, having been dealing with all of my own issues before hearing about this.

So sorry to leave information out. My parent's house has been valued at £205,000. They are both 62 years of age. My father is self employed and supports my mother.

yes the remortgage would be to consolidate the existing mortgage and loan.

My father took out the orginal loan to consolidate debts that had accrued as his business contracted....i expect it was taken out in both of my parent's names though. I can't ask them anything right now because they don't wish to talk about it.

No my mother wasn't advised to take independent advice, not as far as i know. Sorry to sound naive (i have been as far as finances are concerned unfortunately) but what does etridge vs. RBS mean?

Thanks for your time

minimike2

Mortgage + Loan = £115k = 56% Loan to value....this isnt negative equity??

To be honest, with thier ages and presumeably retirement nearing, at that level, I would have already been telling them to seriously consider selling instead.

Assuming they have a decent credit history and the income to support a £115k mortgage then I dont see any problem in them getting a mortgage to lump the two togehter, even with there ages there are lenders that would give it to them over a 20 year term, and there would be other ways of structuring a new mortgage so that they would get a decent deal with a high street lender, but the real question here is what is the actual plan on repaying the outstanding balance, as it appears at present that there is not one. The fact that a £66k secured loan was taken out also indicates that they were possibly struggling with finances way before now, which would get worse given a larger mortgage payment (unless it was taken for a significant other purchase).

Do you know what your fathers net profits have been for the past few years?

willing2learn_3

Thanks minimike2!

I'm afraid i don't know what my father's net profits have been. It's not something they've discussed with me.

They just about cope with the repayments and i think the plan was to make repayments for 8 years, but i might be wrong. The loan was taken out a few years back and though they were struggling for a while i think they readjusted and were coping with the new arrangement ok up until recently.

At first they were saying that slightly reduced payments per month was all they needed, but now they are saying that with the added costs of a remortgage they are just losing money and they are better off selling.

beingjdc

There's not really enough information to say for sure, but yes, it looks to me like they are doing exactly the right thing.

They have a much bigger house than they need now they are on their own, and are throwing away money on bank interest and council tax, when they could have somewhere smaller, buy it outright, and enjoy themselves with less stress as they get older.

willing2learn_3

Thanks!

the thing is they've been told that they would probably not be able to get another mortgage for a smaller property (from the mortgage advisor that has recently turned them down, he said their age was against them).....In any case the price of properties now, i would imagine they would not be able to buy one outright.

Something i might not have added, my father says he has a bad credit rating due to his income not being steady over the years.

beingjdc

willing2learn wrote: »

Thanks!

the thing is they've been told that they would probably not be able to get another mortgage for a smaller property (from the mortgage advisor that has recently turned them down, he said their age was against them).....In any case the price of properties now, i would imagine they would not be able to buy one outright.

Really? How big is the house they're selling if it was a "family home"? You think it will fetch over 200k, and they have about 110k to pay off.

That gives them 90k cash to start with, before they need to consider a new mortgage.

Most towns where even smallish family homes are £200k, small retiree style places are not far over £100k.

willing2learn_3

I guess they are doing the right thing.

If they manage to sell they will have a lump sum of around 90,000 (although cannot be sure at the moment with the housing situation the way it is)......they will have rent of around £700-£800 per month. Considering most of the time they've been meeting the obligation of £1800 per month, they will be much more comfortable.

Mum said one of the remortgage deals they discussed with a mortgage advisor was that they would end up paying £260,000 and working much longer than they wish to. I don't want that for them, but i just hope we haven't missed something.......they haven't tried any independent brokers (apart from speak to one and didn't follow through when he wanted £200 up front as i said above).

Dan_Collins_2

The age will be an issue. They have a few years left to pay over £100k back.

However if you can prove income you may be able to remo and pay off the loans. However it will have to last until they are 70-75 and this may not cost a lot less.

You need a mortgage broker to look at this, but in this climate you may have to Pay a fee as it may not be a simple mortgage to arrange. You could try Halifax or C&G direct. DOes Dad have a pension?

Selling may not be the answer as it may take months.

willing2learn_3

beingjdc wrote: »

Most towns where even smallish family homes are £200k, small retiree style places are not far over £100k.

Thanks beingjdc!

I have discussed this with them before but they don't seem at all confident that they would get another property. Dad says his credit rating would be against him, they both think their age would be against them to get another mortgage and they both keep insisting to me that there are no properties out there for around £100k.

Does anyone know if dad's credit rating would really go against him if he could virtually pay for a property outright?