Advice please re motgage for a 78 year old

andreapurr

My lovely Mum is looking to re-mortgage to pay off some debts and up-date her home. She currently has a 24,000 mortgage with the Halifax. Her home is worth beween 350,000-400,000. She bought it for 300,000.
Please can anyone advise as I have approached lenders who have said she is too old and the thought of equity release when looking through the fine print is too much of a financial risk.
Thank you anyone in advance.
Ps my Mum is on a state pension with only a very small private pension on top.

GMS

How does she propose to support mortgage payments?

Could she not sell and downsize to something mortgage free?

andreapurr

No. I am her carer.

Simon_gloster

Most lenders will have a max age of 75 at term end.

There will be a select few off the high street thay MAY consider this, but income proof by way of pensions will be a minimum requirement as you have posted.

How much extra does she need?

Conrad

You could buy the property in your own name, subject to various items. Not all lenders will allow such a purchase where no deposit is physically paid.

It will depend on matters such as how big your own mortgage is and whether it stacks - up in terms of your moving into the new residence (for example is it close enough to your main job).

Complex, but possibly doable. I suspect you'll need a broker for this one.

NAR

How long is left on the current £24k mortgage? How is she managing to pay this on such a low income? I can't see anyone giving her a further mortgage with the information you have provided. Downsizing seems the obvious way forward.

magpiecottage

Whatever happens, if she takes on a larger mortgage to raise capital that IS a form of equity release (by definition).

She CAN do this via a lifetime mortgage, which will be repaid when she no longer needs the property as a home, either because she goes into a home or dies. The home will be sold, the loan repaid and any excess will go to the estate.

If you are a live in carer, you would need to sign a waiver of your right of residence. Put bluntly, this is so the lender can kick you out when the house needs to be sold.

In theory, the loan can be on an interest-only basis. The interest is paid each month and the debt remains the same. On death you sell the house and repay it - or raise the funds elsewhere to do so.

However, she can elect instead to have the interest rolled up. This means nothing is actually paid until the end and the lender gets their money then. The disadvantage is that the interest not paid is added to the capital of the loan and then itself gets charged interest so the size of the loan goes up quite fast.

It is possible for the loan to exceed the value of the property but the family would not be responsible for repaying it and, in any case, most lenders provide a "no negative equity" guarantee.

Speak to a mortgage broker who holds the Certificate in Equity Release from the Chartered Insurance Institute or the Certificate in Regulated Equity Release from the IFS School of Finance.

poppy10_2

andreapurr wrote: »

My lovely Mum is looking to re-mortgage to pay off some debts

Remember, remortgaging will not pay off any debts. All she will be doing is transferring the debts from an unsecured basis to debt secured on her home.

koexelek

Simon_gloster wrote: »

Most lenders will have a max age of 75 at term end.

There will be a select few off the high street thay MAY consider this, but income proof by way of pensions will be a minimum requirement as you have posted.

Ipswich Building Society will consider it if the above criteria can be met

holly_hobby

The beauty of a lifetime (age related) equity release arrangement - is that your Mums income is irrelevant, which would assist with the low levels she seems to be in receipt of.

As a point of ref - there is only 1 lifetime mortgage provider that offers the option to pay the accumuliating interest each month, either wholly (to effectively ring fence the debt) or partly. All other providers roll the interest up (obv this is not relevant in the case of a home reversion scheme).

The suggestion to purchase the property from her at a discounted pch price has its own issues - both tax and also deprevation of assets (IF you are unable to care for her yourself, and she seeks state funded long term care). There are various ways to mitigate such issues - which are too complex to go into detail here, so obviously advice in this area should be sought from a suitably qualified adviser, who will guide you through the processes.

One point I would make here is have you explored all other options i.e requesting a reduced repayment plan with her creditors, if she had limited income she may be eligible for just £1 payment per month, by the completion and submission of a budget planner & letter of request, or she could offer a reduced full and final settlement fig to close them off completely. Here is a link to a debt advisory free site, that has letter and budget templates and general guidance which may help -http://www.nationaldebtline.co.uk/england_wales/.

I would also encourage you to ensure Mum is in receipt of ALL eligible benefits and state assistance (inc if she is eligible for any home improvement grants/assistance) - this area is often overlooked and may mean the difference between having to downgrade or enter into any lifetime mortgage arrangement, and staying where she is, with no extra debt liability.

I have added a link to Age UK (Age Concern in old money), there is lots of valuable info on there, inc articles on equity release .. http://www.ageuk.org.uk/

If you want to explore the lifetime mortgage arrangement - give a shout and I'll happily assist with general guidance as needed

Hope this helps

Holly x

ILW

What is the problem with selling up and downsizing?