Mortgage Help for recently widowed

Johnny11_2

Hi

Im hoping to get some advice please. My dad has recently passed away and has left my Mum in an almighty financial mess.

My dad looked after all the finiancial side of things and to say he was not very good is understatement. He told my Mum that if anything happened to him she would be ok.

Well, sadly this time has come and its not taken care of. They had an interest only mortgage and in December 2010 it elapses. The outstanding balance is £16,000. As there was no life insurance attached to this mortgage there are no funds to cover this.

What I would like to ask is what would be her options in 2010 if she does not have funds to pay it. She is currently on Pension credit with no savings what so ever.

Could anyone help shed some hope on this mess

Thanks

John

dunstonh

She could (and probably will have to) do equity release. This is effectively borrowing against the property but not having to make monthly payments. The interest is built into the equity of the house and the provider takes a share in the property. There are various ways of doing this.

The other one is to sell and downsize or move to a cheaper area.

Johnny11_2

Many Thanks for your reply

We have already tried option 2 but she will not (unless she has too) consider moving, all her friends are there and it is the house we grew up in.

Thanks once again

John

silvercar

Maybe more beneficial for a family member to find the money. Equity release will mean that a large chunk of the equity in the property will be lost.

feisty1

silvercar wrote: »

Maybe more beneficial for a family member to find the money. Equity release will mean that a large chunk of the equity in the property will be lost.

"family member to find the money"

Regarding the above suggestion be aware this could have an impact on any benefits/entitlements now or future for yr mother.

Met_Bobby

Could she arrange an Equity Release mortgage with the beneficiaries making some monthly payment to retain as much of the value of the property as possible? As the money raised goes to pay off an existing loan, would it have zero effect on benefits ?

Icequeen1

She may be entitled to mortgage interest help through pension credit. Worth checking with a CAB.

IQ

feisty1

Met_Bobby wrote: »

Could she arrange an Equity Release mortgage with the beneficiaries making some monthly payment to retain as much of the value of the property as possible? As the money raised goes to pay off an existing loan, would it have zero effect on benefits ?

Repaying the loan is not an ER mortgage (defeats the purpose) ER can also effect benefits/entitlements.

Met_Bobby

feisty1 wrote: »

Repaying the loan is not an ER mortgage (defeats the purpose) ER can also effect benefits/entitlements.

I don't think that this is true is it? I could be wrong but,

I thought that Equity release was a generic term covering lots of different types of mortgage including interest only. Lifetime mortgages (which I think is being referred to) can have an element of repayment if the lender builds this into a product. I am not an expert but I am sure that I have heard of this.

It is not Equity release that affects benefits, it is the amount of available capital that an individual has. If one loan pays off another then there is no additional capital to affect benefits. I am sure that there will be an expert in the subject who could clarify this for me.

feisty1

Met_Bobby wrote: »

I don't think that this is true is it? I could be wrong but, I thought that Equity release was a generic term covering lots of different types of mortgage including interest only. Lifetime mortgages (which I think is being referred to) can have an element of repayment if the lender builds this into a product. I am not an expert but I am sure that I have heard of this. It is not Equity release that affects benefits, it is the amount of available capital that an individual has. If one loan pays off another then there is no additional capital to affect benefits. I am sure that there will be an expert in the subject who could clarify this for me.

I am CF7 qualified

Equity release made clear from the FSA/ER can affect eligibility for the means-tested benefits
http://www.moneymadeclear.fsa.gov.uk/products/equity_release/equity_release.html
http://www.ship-ltd.org/

notisis

Please ring pension credit helpline asap as your mother should definitely be entitled to help on the mortgage interest. It may even be if your parents were already in receipt of pension credit that the mortgage interest was being paid direct to the mortgage company anyway. Give them a ring to check who made the payments each month. There really is no need to go down the equity release route from what you say. Good luck.

Before ringing pension credit double check the situation with the mortgage company and then have all the info relating to pension credit claim in front of you. Your parents should have had various letters detailing what payments they receive.