Help: Can I help stop my father-in-law losing his house?

Elvisia

I think there are two issues here: firstly making sure he stays in his house as if he's got cancer the stress of moving could be catastrophic for him, and two, making sure you get the best inheritance (sorry if that sounds heartless). So if it were me, I would be drawing up some paperwork to say I would pay off the mortgage, get siblings involved and get everyone to pay it off as soon as possible, then when he dies we'd get back the percentage we'd paid off, plus a percentage of proceeds from the house. Is there any way you can get control over the house and get it signed into your name and you take over the whole situation? Do you already have a mortgage of your own? I am all for people keeping property where they can rather than sell, as it's extremely easy to lose loads of money whereas properly should keep it's value.
It would be worth paying to seek proper legal advice on this one, as a few hundred quid spent now may save thousands in the future. My parents are now 'at that age' and all their friends have made terrible financial decisions regarding property, and I can't think of anyone who hasn't got themselves into a mess by downsizing their property, and this is aside from what is left to the children.

BigAunty

Notmyrealname wrote: »

Put aside £100 a week.

However the problem is right now, not what happens in 5 years time. And right now, £25-£30 a week from siblings would resolve all the issues. £125 a week would pay off a repayment mortgage over 5 years assuming a 3.5% interest rate.

So not an issue for the OP and his FiL to find £550 a month minimum for the next 5 years then? Sorted.

iain999

Thanks again for all the comments/advice as its most appreciated.

Firstly, in the OP when I say he could lose his house, I mean without doing anything (and worst case scenario), the house will be repossessed because he can’t pay the debt. The only other immediate option I saw was to sell the house to pay off the debt. I’d say selling the house is last resort mainly due to the fact that it’s been his home for more than 30 years and he wants to stay there. Thus looking at all the possible ways to keep his house but keeping an open mind for other options.

So from the previous posts, I’ve picked up the following on options to keep his house:

• I agree that getting a clear view of income/expenses is key. For the income I found a link to get a forecast of his state pension come September and for expenses I need to confirm his credit card situation.
• ‘He says’ he can only afford to pay the interest on the mortgage at the moment and that’s all he’s been paying, thus the £28k is just sitting there and needs a solution. Even with revising his finances and creating a proper budget, without any other help I doubt that he can afford a £28k mortgage, especially when he reaches retirement age in September when he’d prefer to stop working in his part time job.
• Shelter Scotland links were good (thanks BigAunty) so I’ll look into 2 schemes I found (Mortgage to rent scheme, Mortgage to shared equity).
• I’ll look into Disability Living Allowance and Council Tax rebate ASAP and pension credit when September comes which could help his income.
• I don’t think taking in a lodger will be a goer and see stress levels going through the roof for him with just that on its own. Thanks for the suggestion though.
• I think Selling to a private firm and renting back is a non starter both from the comments here and reading Shelter/CA websites.
• Apart from his daughter (i.e. my wife) he doesn’t have any family. If there is anything we can do, we will however our financial situation at present isn’t the best so not sure what we could offer, if anything.
• I’ve emailed Shelter Scotland for any further advice and will arrange a meeting with our local citizens advice office.

Keep the advice coming please

Notmyrealname

BigAunty wrote: »

So not an issue for the OP and his FiL to find £550 a month minimum for the next 5 years then? Sorted.

Where did you get £550 a month from? Its currently an interest only mortgage with a £28k balance.

BigAunty

Notmyrealname wrote: »

Where did you get £550 a month from? Its currently an interest only mortgage with a £28k balance.

From the OPs suggestion there is a 28k balance to pay off in 5 years (duration of mortgage term to be confirmed, though as he says 5-10 years) and from your suggestion that "£125 a week would pay off a repayment mortgage over 5 years assuming a 3.5% interest rate," That works out at around £540 a month.

It is not enough just to pay a few quid each week to pay off the interest of the balance for however long the mortgage terms lasts - that strategy is precisely the slow sleep-walking into repossession that the OP has observed in his FiL.

The OP has to find 28k PLUS the interest in x period of time when all parties appear strapped for disposable income, plus identify any extra debts that hinder this.

Lenders can and do repossess properties as a last resort when it is clear that the owner has no realistic prospect of ever clearing the mortgage debt. At least this issue has been picked up relatively early compared to some similar posts we have seen here.

BigAunty

iain999 wrote: »

...

• ‘He says’ he can only afford to pay the interest on the mortgage at the moment and that’s all he’s been paying, thus the £28k is just sitting there and needs a solution. Even with revising his finances and creating a proper budget, without any other help I doubt that he can afford a £28k mortgage, especially when he reaches retirement age in September when he’d prefer to stop working in his part time job.

I appreciate that he has health issues and that sometimes the withdrawal of benefits and payment of taxes but is it wise for him to cease employment when he faces repossession?

You can model these scenarios on the Turn2us online benefit calculator, perform your own 'better off or not' calculations there.

Also, until he retires, it might be worth doing to a check on this calculator anyway to see if he's eligible for tax credits on his part time wages and if so, how far back he could claim. However, it looks like there is the criteria that he must have been on benefits before, I think. Not so familiar with the rules on WTC for over 50s, I'm afraid.

http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/workingtaxcredit/over50s.htm

iain999

In terms of mortgage term left, it looks like he re-mortgaged back in September 2008 to 'clear' the mortgage by September 2013. At that time he expected to be working full time until September 2013, however obviously circumstances have changed.

With all his financial problems (which seem to have been going on for a significant period of time without us knowing), he agreed with the bank at some point to pay interest only. This resulted in £28k worth of debt sitting there with no plan on how to sort it out.

Hence the problem I'm trying to help him with. I wish he'd involved us sooner however it sounds like there are other people who have left it much later to tackle, which is a real shame.

On his preferred option to retire in September 2012, I think the main reason for this is that he's finding his job really difficult after his stroke however I agree that carrying on working needs to be considered an option at least.

sleepless_saver

BigAunty wrote: »

I appreciate that he has health issues and that sometimes the withdrawal of benefits and payment of taxes but is it wise for him to cease employment when he faces repossession?

You can model these scenarios on the Turn2us online benefit calculator, perform your own 'better off or not' calculations there.

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He might well be better off not working. As you say, the scenarios need to be tested out. It sounds like he would get guarantee pension credit now if he stopped working. This would cover mortgage interest, council tax etc. Whether that would continue after he starts to get state pension will depend on amount of state pension.

He needs urgent debt advice, especially if he is prioritising payments to the credit card companies over the mortgage payments.

Sad, he probably bought the house with the best of intentions but would have been better off, less worried and more securely housed if he had stuck with renting.

zzzLazyDaisy

Has anyone spoken to his lender about his current situation? If not, I suggest you make an appointment and someone goes with him, and has a meeting with them. Until then you don't actually know what is options are, and what the likely consequences might be.

For example, if you can work out what his income will be after retirement including pension credits, is there any possibility that the lender would agree to extend the term? This could mean that if he converts to a repayment mortgage over a longer term the mortgage will be paid off and he can remain in the house. If the lender is clear that the mortgage must be repaid by the term date, at least you will know what you are dealing with.

If he really cannot afford to pay off the mortgage on the due date, and if the lender is unable to offer any workable suggestions, then he is facing repossession in the next few years. In that case, as hard as it may be, his best way forward is to sell up voluntarily rather than being repossessed.

It is worth speaking to the council/local housing associations as there may be the possibility of retirement or supported housing. This would give him security of tenure, and he wouldn't have the responsibility and expense of maintaining the house. Yes, if he sells up, he will have capital, which means that he'll have to pay rent/council tax but once his savings have reduced he will get assistance. He will also have the money to clear his debts, and at the moment it seems that you don't really know what this amounts to.

Good luck.