Parents need help

WW77

My parents need some urgent advice.

My dad is a carpenter and was made redundant nearly 2 years ago. Unfortunately he is a very old 62 year old and can no longer use his hands as his money earner as he has slowed down dramatically (mentally) and no one will employ him.

My mum works part time in a supermarket and will be retiring in December 2012.

They live in a 4 storey house in Plymouth and have managed to rent out the bottom half for nearly £500 a month. Apparently, as this is an income, my dad cannot claim any benefits and no one will employ him. They have looked into Equity Release and this is not a good outcome. They are struggling to pay the mortgage (£700 a month) and running out of ideas.

Do they have any options at all or is Equity Release the only thing left?!

Any words of advise or a point in the right direction would be amazing. Thank you.

Conrad

Equity release is problematic when part of a residence is let out. Had one just like this recently. Had to put together a good case to get it through.

Is selling up and downsizing a possibility?

opinions4u

First of all, your parents' situation is a fine example to others. Mortgages that goclose to retirement, into retirement, excessive terms, interest only etc will come back and bite people in far too many cases.

The option that I'd consider ahead of equity release is selling up and renting.

I doubt they'd achieve equity release on a property that's part let.

WW77

Many thanks for your responses

Unfortunately my dad does not seem to think downsizing is an option. I know it's a difficult question but if they were to start the ball rolling to sell, how long could it take?!

I am not on the property ladder myself so have no idea on time frames. I appreciate it could go on for months but they seem to think it will take to long to sell and equity release is only option!

dimbo61

How long will it take to sell depends on the housing market in plymouth and the condition of the house,
If your dad is 62 and not in the best of health then selling up now and buying a bungalow for cash would give them security.
If they have little money left ( under £16K) then he could claim benefits and mum,s pension plus dads in 2/3 years would help

TrickyDicky101

How much is outstanding on the mortgage?

tanith

Maybe he could ask the mortgage company for a payment holiday for 6mths if he is that close to running out of money, it would give him more time to sell and buy something smaller.

the_cat

I think your dad is wrong. Downsizing is a far better option. If they are struggling to pay the £700 now, then it will be impossible once your mum retires. If they wait and get into trouble with the mortgage, then their problems will only escalate. Besides how practical can a large 4 storey house be in their retirement anyway?

It may take time to sell the house. It may not. Sold mine last week after 6 days on the market! Put it on the market and see what interest there is. You lose nothing trying (well about £60 for the green energy thingy)

WW77

Thank you very much for your words of advice. I spoke with my dad last night and he seems to think he's going to find a job and doesn't want to move. Unfortunately he is deluded and told him downsizing is the obvious thing to do!

They have around £16k left on the mortgage which is frustrating because the finish line was in sight!

They seem to think claiming benefits won't happen because they have an income through their tenant downstairs!

He has agreed to put the house on the market. My concern now is they will get ripped off by estate agents! But then I guess it could be worse, they could go for Equity Release.

The_J

Only 16k? So there is literally only a couple of years left on the mortgage?

With the equity in the property I think they are in a position where switching to interest only, in the short term, is the best bet while they look to either a) downsize b) come up with enough wedge to pay it off.

Can you not just pay it off and get them to change their will to give you the money back when they die?

WW77

Unfortunately I have my own debts to worry about and would like to get on the property ladder myself in the coming years.

This is the frustrating thing. If my dad could get a job for 2 years they could pay the mortgage quite easily because they have a tenant as well! They certainly had the right idea but unfortunately my dad can not hold a job down any longer than a few weeks!

Alternatively, if anyone has a spare £16k they could give us that would be super.

I really appreciate all the feedback. Thank you