Mortgage for 80 yr old?

Mr_helpful

one is assuming he lives on his own. To avoid the nanny state Perhaps you could buy the house off him and then rent it back to him. I can understand your concern over equity release. Its also noticeable with this product that it requires special licensing by the FSA.
It would also be useful to know how much money you want to raise and what his expenses are because the concerns of him living too long are valid for a straight mortgage as well as equity release.
For details of equity release you should seek the advice of someone suitably qualified and not just any old mortgage broker.

alba37

Mr_helpful wrote: »

He could go interest only so he is paying as little as possible and not rolling up his debt.

My Dad did this and it left my Mum in a bad situation. Our circumstances were very different though. (Although most were unforeseen)

I don't know all the ins and outs re: Nursing home fees and selling property to fund them. But it is something I think you need to consider before taking a mortgage out on the home. Does anyone else live with your Dad? And who are the beneficiaries of his will? (I don't want you to answer, just think it may help you find a solution)

You may be pretty sure he won't need nursing home care and if that's the case and I were you, I would take out a mortgage on the house, but if their are other beneficiaries, it may be a bit more complicated. Your Dad deserves the best possible care in his latter years and I can see you are trying to make that happen. Hope you find a suitable solution soon.

Mr_helpful

I am assuming from the original post that he lives on his own otherwise I would agree with you.

Alan_M_2

I've just organise a remortgage on my parents home - we used a broker but the mortgage is with Abbey, they are in their early 70's and I'm effectively guaranteeing the mortgage (well my Ltd company is which I wholly own - long story).

They capped the term at 15 years and organised a flexible loan based on interest only. However we are making repayments calculated as though it's a repayment mortgage , but the idea is we pay this all back within 3 years anyhow.

The only time I would ever consider equity release a viable option is if you are in absolute dire straights and there are no other routes or if there is no living benefactor to your estate and it would pass to the crown. Other than that, you are effectively giving away a large percentage of the value of the property for nothing.

If there are relatives able and willing to help that is always by far the best option. Even if it's a guarantee on a mortgage.

EdInvestor

There are many issues involved here, including IHT and CGT as well as short and long-term care costs.

Take specialist advice lest what you arrange to resolve one problem simply lands you in the middle of another one.

auntie_brenda

Thanks all for your advice.

Dad lives in a doll's house as it is - small, 2 bed semi bungalow, there are no 1 beds apart on special complexes and these are dearer than his.

Nowhere near IHT threshold, I am sole beneficiary. Can't see how buying and renting to him would help - I wouldn't be able to take on this whole mortgage without charging market rent (if anyone would lend).

Was thinking - rather than equity roll down how abut an offset mortgage - could put most of it straight into offset account so no interest to pay and totally flexible? Is this feasible?

EdInvestor

How old is he? How much is the house worth and how much does he need?If it's smallish and you have spare savings then an offset might work quite well for a time.

auntie_brenda

He's 80, house worth around 120k, as to how much he needs . Extra help in the house costs around £200 a week (I'm not around M-F), but when he's at his best he doesn't need any help.

Me, spare savings :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: v funny, you've obviously not seen my signature! What I meant was if he had an interest only offset and we put it all into the savings account linked to mortgage he coudl have instant access but at a cost only of what he needed.

Ian_W

I had read your sig but thought I'd wait for a reply confirming that you were considering offsetting the amount borrowed. It might work - but not for long, I don't think.
Say you borrowed £40K in order to use £4K per year to top up when he needed help. If the rate was 6%pa it would only cost £240 interest in year 1 but by year 4 that would be nearly £1K out of the £4K just to pay the interest and the £4K would have been eroded about 12% by inflation/care cost rises - so wouldn't probably buy as much care.
Another thing to watch is whether any of the benefits you mention are means tested - I don't know whether any are but the amount of the mortgage that you offset would probably affect them if they are.

You've dismissed equity release but actually how much do you know about it? It's had a bad rap in the past which is why the FSA now regulate it more closely than other mortgages but as it has become more mainstream it's become comparatively cheaper and has, as Ed mentioned earlier, features like drawdown which allow you to borrow as you need it rather than just as a lump at the beginning. Anyway there is a factsheet at:
https://www.ageconcern.org/AgeConcern/Documents/Raising_income_or_capital_from_your_home_FS12.pdf
and the trade associationis SHIP [safe home income plans] at
https://www.ship-ltd.org/

Whilst I certainly don't think equity release is right for everyone based on your posts I think it may be your best option - certainly worthy of closer consideration.

Mr_helpful

Equity release is really I think for large homes otherwise tha amount released is too small to do much with. If you want to go Offset there are only about 3 lenders I can think of that have no maximum age limit, so your choices are a bit limited here too.