Endowment Mortgage comeing to end ... no endowment policy and no job!

Cals72

Hi

I wonder if you anyone could offer any advice?

My dad, before separating from my mum, bought a house nearly 25 years ago at approximately £32K and then borrowed a some additional monies (secured) against the mortgage to take it up to £46K. I would estimate conservatively that the house is valued at £100k now.

My parents separated and my dad has been living in the home on his own for the last 15 years. Over the course of the last 3 years he became ill and has stopped working and his housing costs have been paid by housing benefit.

He has recently received a call from his mortgage company - halifax - and as part of the call they mentioned that the mortgage is due in 6 month given it was an endowment mortgage. So effectively he needs to come to come up with the £46k or remortgage his house.

Unfortunately (and stupidly i accept) one of the ways he saved on his monthly outgoings was to stop the endowment policy that went alongside the mortgage?

Clearly if he isn't working he wont be able to get another mortgage and i am at a loss as to where to start looking for advice - im worried that he will loose the house and have to move.

I have about a 1/3 of the money required in savings but that wouldn't be enough. I have also have mortgage and doubt i would be able to get another.

Has anyone else ever been in this position and could offer some advice.

Thanks

Cals

boobies

Has he asked Halifax about extending the mortgage term?

Cals72

Hi, no - didn't even consider that as an option given that they mentioned it to him on the phone. Will given them a ring and see what they have to say nothing to loose i guess.

Thanks for the reply.

xylophone

You say he 'stopped paying' into the endowment policy. Do you mean he made it "paid up"?
If so, does the policy still have a maturity value?
http://www.mortgagesorter.co.uk/types_mortgages_endowment_choices.html•

Make it paid-up

If you can't afford to continue your payments, another option is to talk to your provider about making your endowment paid up.
This simply means it continues to run without any new payments until the agreed maturity date.

Of course, this will affect the final value, so be sure to check this."

BigAunty

How did he get housing benefit as an owner occupier as this is only for tenants? Do you mean he got the interest paid under the SMI scheme which is for owners that are struggling to pay their mortgage?

See the Shelter website for his options - they have a section dedicated to home owners struggling to pay their mortgage, including one scheme where a social housing landlord buys it and lets the former owner-occupier stay there as a tenant, I think they prioritise the disabled and those with dependents though.

See the MSE website to see if his endowment policy is an area where he can seek compensation under the mis-selling scandals that went on for the years where he did pay, though I don't know if he'll have much case if he cancelled the investment vehicle that was supposed to pay it off. My dad's policy led to a shortfall and he sought redress and got a lump sum.

Realistically, if he can't pay off the balance of his mortgage, and if he doesn't qualify for a govt scheme, he will have to sell up and either move somewhere much cheaper or go into rented accommodation. How can he possibly remortgage if he has no realistic prospect of paying the balance? What responsible lender would offer an extended mortgage term to someone with no income? I have seen a thread on the housing forum where someone's mortgage company refused an extension to the mortgage term on those grounds and they were faced with a short period of time in which to sell the property or face repossession.

Is he claiming all the benefits he is entitled to? Does he have mobility/care needs and if so, is he claiming Disability Living Allowance? How old is he? Is he on JSA or ESA for example?

uponahill

BigAunty wrote: »

See the Shelter website for his options - they have a section dedicated to home owners struggling to pay their mortgage, including one scheme where a social housing landlord buys it and lets the former owner-occupier stay there as a tenant, I think they prioritise the disabled and those with dependents though.

Unfortunately very few people actually either don't qualify for that scheme or if they do it is so drawn out that I have heard that the property is repossessed before the arrangement can be finalised.
Most banks/building societies generally start repossession action with as little as 3 months of arrears at the moment.
Some do let it go 6 months - but very rare.

Realistically, if he can't pay off the balance of his mortgage, and if he doesn't qualify for a govt scheme, he will have to sell up and either move somewhere much cheaper or go into rented accommodation.

It is very unlikely that he will be able to buy with only £50,000 and if having to rent, he will have to use up most of that £50,000 before he can have help with the rent from the council.

I have seen a thread on the housing forum where someone's mortgage company refused an extension to the mortgage term on those grounds and they were faced with a short period of time in which to sell the property or face repossession.

This is now becoming more and more common. Those that have interest only mortages with no vehicle to repay the capital used to be able to negotiate an extension for years, even if they were on benefits only as SMI would carry on being paid. Now they want the money within 28 days as per the mortage agreement.

This is a lesson that will come to haunt those with interest only mortgages for the future

boobies

BigAunty wrote: »

Realistically, if he can't pay off the balance of his mortgage, and if he doesn't qualify for a govt scheme, he will have to sell up and either move somewhere much cheaper or go into rented accommodation. How can he possibly remortgage if he has no realistic prospect of paying the balance? What responsible lender would offer an extended mortgage term to someone with no income? I have seen a thread on the housing forum where someone's mortgage company refused an extension to the mortgage term on those grounds and they were faced with a short period of time in which to sell the property or face repossession.

I also know of people that have been given an extension, albeit by Santander, and every lender will have differing criteria. It is all down to personal circumstances, and the question needs to be asked before assuming the worst.

Cals72

xylophone wrote: »

You say he 'stopped paying' into the endowment policy. Do you mean he made it "paid up"?
If so, does the policy still have a maturity value?
http://www.mortgagesorter.co.uk/types_mortgages_endowment_choices.html•

Make it paid-up

If you can't afford to continue your payments, another option is to talk to your provider about making your endowment paid up.
This simply means it continues to run without any new payments until the agreed maturity date.

Of course, this will affect the final value, so be sure to check this."

Hi, no he didn't cash the policy in - just checked his paperwork and he stopped paying mid term. Looks like its valued about £12k which is a big help still not enough!

Given he stopped mid term i doubt, but will check, if he could possibly have been mis-sold.

Thanks Cals

Cals72

BigAunty wrote: »

How did he get housing benefit as an owner occupier as this is only for tenants? Do you mean he got the interest paid under the SMI scheme which is for owners that are struggling to pay their mortgage?

Hi, sorry not sure how his housing benefit works - essentially the Housing Benefit only pays the interest and not the capital

See the Shelter website for his options - they have a section dedicated to home owners struggling to pay their mortgage, including one scheme where a social housing landlord buys it and lets the former owner-occupier stay there as a tenant, I think they prioritise the disabled and those with dependents though.

Thanks will do some research there!

See the MSE website to see if his endowment policy is an area where he can seek compensation under the mis-selling scandals that went on for the years where he did pay, though I don't know if he'll have much case if he cancelled the investment vehicle that was supposed to pay it off. My dad's policy led to a shortfall and he sought redress and got a lump sum.

He stopped paying mid term, i don't think he will have been mis-sold but again will have a look.

Realistically, if he can't pay off the balance of his mortgage, and if he doesn't qualify for a govt scheme, he will have to sell up and either move somewhere much cheaper or go into rented accommodation. How can he possibly remortgage if he has no realistic prospect of paying the balance? What responsible lender would offer an extended mortgage term to someone with no income? I have seen a thread on the housing forum where someone's mortgage company refused an extension to the mortgage term on those grounds and they were faced with a short period of time in which to sell the property or face repossession.

I hope it doesnt come to this - this is what i am trying to avoid!

Is he claiming all the benefits he is entitled to? Does he have mobility/care needs and if so, is he claiming Disability Living Allowance? How old is he? Is he on JSA or ESA for example?

Yes, he has DLA and IS - and he can comfortably live with this income at the moment. Its just the threat of losing his house that is the concern.


This seems crazy to me - if we are forced to sell up, I am pretty sure that the cost to keep my dad in a Housing Association flat or council flat will be more.

I think i need to go see a IFA and see if i can get a mortgage on the £47K - 12k @ £35K. Maybe should include my savings too.

Cals72

boobies wrote: »

I also know of people that have been given an extension, albeit by Santander, and every lender will have differing criteria. It is all down to personal circumstances, and the question needs to be asked before assuming the worst.

Hi Boobies - i will phone on Monday and let you know! There is still quite a lot of equity in the house so perhaps they might view it with less risk. Will let you know what they say - thanks for the advice.

McKneff

BigAunty wrote: »

How did he get housing benefit as an owner occupier as this is only for tenants? Do you mean he got the interest paid under the SMI scheme which is for owners that are struggling to pay their mortgage?

See the Shelter website for his options - they have a section dedicated to home owners struggling to pay their mortgage, including one scheme where a social housing landlord buys it and lets the former owner-occupier stay there as a tenant, I think they prioritise the disabled and those with dependents though.

See the MSE website to see if his endowment policy is an area where he can seek compensation under the mis-selling scandals that went on for the years where he did pay, though I don't know if he'll have much case if he cancelled the investment vehicle that was supposed to pay it off. My dad's policy led to a shortfall and he sought redress and got a lump sum.

Realistically, if he can't pay off the balance of his mortgage, and if he doesn't qualify for a govt scheme, he will have to sell up and either move somewhere much cheaper or go into rented accommodation. How can he possibly remortgage if he has no realistic prospect of paying the balance? What responsible lender would offer an extended mortgage term to someone with no income? I have seen a thread on the housing forum where someone's mortgage company refused an extension to the mortgage term on those grounds and they were faced with a short period of time in which to sell the property or face repossession.

Is he claiming all the benefits he is entitled to? Does he have mobility/care needs and if so, is he claiming Disability Living Allowance? How old is he? Is he on JSA or ESA for example?

OP said 'housing costs were paid for' I presume that they meant the interest was paid for.