Options for retired parents with mortgage

vivatifosi

Hi everyone, wonder if I could ask for your help.

My parents are past retirement age, though my Dad still does a bit of work. They are not great financial planners and still have a mortgage outstanding on their home which is due to be repaid next year. Unfortunately they have been paying interest only. The loan is relatively small and equates to about 15% of the home's value.

I want to work out what their options are. As far as I can see it they could:

* Move somewhere cheaper and pay off the mortgage, though they don't seem that keen.
* Get a new interest only loan.
* Look into an intergenerational loan, such as that from Kent BS, that will cover them for the rest of their lives and which my siblings and I could look to underwrite.
* Look into equity release.

I'm no expert, and there may be plenty of other offers out there. When I mentioned it to my IFA earlier in the year he said it wasn't his area of expertise, so what sort of expert should I speak to?

We just want to see our parents comfortable in retirement, and are not particularly worried what inheritance we see at the end of it. My Dad can't carry on working forever, though they will have enough funds coming in to pay off an interest only loan, money would be very tight.

All advice greatfully received.

Thanks!

Ian_W

I don't think you'll find a "one stop shop" for the options you've outlined above and I also think you've pretty much covered what I think their choices are. A mortgage broker could look at the IO mortgage options particularly looking at lenders whose age criteria are more generous than others, estate agents in the locality would be an appropriate starting point in terms of downsizing and so on. It really comes down to what your parents favour for the future.

Downsizing is probably the favourite in terms of value for money BUT it does have it' drawbacks in terms of upheaval and leaving what has been a happy family home with good memories etc. My MIL has a house which is too big for her and at 80 she struggles to cope with it at times but she's lived there 40+yrs and her neighbours all rally round to help and look after her when needed. Downsizing would help her in some respects but move her away from what is very much a life support network.

Taking another IO mortgage might see them OK for a good few years yet but their choice of lender will become more restricted the older they get and they will still have an amount outstanding to repay and monthly payments to make.

Many think that equity release is expensive, though the counter is that the lender may well have to wait many years to collect even a penny of what's owed. There are some helpsheets about it at:
https://www.helptheaged.org.uk/Money/Investments/equityrelease/default.htm
https://www.ageconcern.org/AgeConcern/Documents/FS12_0605.pdf
and the umbrella organisation for co's who operate the better type of plans is at https://www.ship-ltd.org

Hope that helps - it really does depend on what they want to do for the future though I'm sure they'll be reassured by you and your siblings being more concerned about them having a good retirement than what they can leave to you.

david29dpo

is it possible for you to clear there mortgage for them? and keep everything in the family? i have done this with my parents and when they have gone, so to speak, i get it back anyway.

vivatifosi

Thanks guys for your feedback. I would love to pay my parent's mortgage off but my own situation precludes it, and that's the same for the rest of us. I will definitely download the sheets and take it from there. Very helpful! Thanks so much.