short fall help please

angelblu335

My in laws have a short fall of 45 thousand on there morgage which has been paid at interest only due to my father inlaw injuring his back a few years ago, there will both at retirement age next sept, could some one please tell us of our options. ( sorry about the bad spelling )
thank u in advance

shortchanged_2

Unfortunately it looks as if their only option would be to sell up and downsize (if there is enough equity) or sell up and rent.

silvercar

Is this an interest only mortgage? Is there an endowment policy attached to it?

Could they afford higher payments? It may be possible to extend the mortgage term, some lenders will lend up to age of 70. Could you afford to lend them some money.

There are schemes available whereby the interest is rolled up and the loan paid off when the property is sold, but that would mean that there would be little inheritance or equity when the property is sold.

holly_hobby

Not sure how long there is left on your parents mge term, as not mentioned. But assuming sooner rather than later .. general options are:-

- sell the property at the end of the mge term, if no mge repayment plan in place

- if on endowment or any investment back method, including a pension mge, request some current maturity estimates from the provider - to get an idea of their estimated position at the time mortgage to be redeemed/policy maturity

- convert to repayment (fully if affordable and no repayment vehicle or partly if there is an endowment, with the part conversion AT LEAST covering the predicted shortfall at the LOWEST growth rate of the projection). If the monthlys are a little high changing repayment method & maintaining the existing term - seek if the lender will be agreeable to extending the term. (of course usual affordability & risk checks will be conducted if the lender does accept to extend)

- another option, could be to seek a standard interest only remortgage to a lender who does not have an upper age limit, of course the normal status checks will be made of your parents, salary, credit check etc .. etc... There are monthly payments - just as they pay now - which will consist of interest only (plus the cost of any life cover or repayment vehicle).

- as an earlier poster touched on, it may be possible to take a lifetime mortgage, whereby no monthly repayments are made to reduce the debt, the debt naturally accrues interest, but the interest is rolled and added to the borrowing - thereby increasing yr on yr the amount repayable, on sale, going into long term care, or death. This type of mge is a specalist area - and therefore there are only a select no of providers who look at this, it is most important that any proivder selected has a "no negative equity" gte at redemption. I would not advise going this route without having recd a suitably qualified adviser, who must be qualified in long term care/lifetime mges - as it can be a complex area with many financial areas to be considered and understood. May not be suitable with regards to whether the max amout released will repay their existing mge - but a consideration.

- there are also products known as home reversion schemes. Whereby by broadly speaking a % of equity is sold by the owners to a provider, with the owners retaining the lifetime right to live in the property. The % sold to the provider can only be realised on the sale of the property, occuring no sooner than the death of the owner/s, or their being placed into long term care or death. Again, an option a lifetime mortgage adviser will be able to assist your with, as professional advice is reqd for this type of scheme, but there is lots of info about such schemes on the net, if you have a google, so you can get an idea of what they involve. Of course the max % pch offered by the provider may not be sufficient to repay your parents existing mge - but its something else to consider that MAY assist their issue.

- please avoid any sale and rent back schemes - open to abuse and little regulatory safeguard

Hope this helps

Holly