Advice for my mam..

Locana

Hi

Wondering if you can help please!

My mum is 62. Has a house worth 340,000 with a 140,000 mortgage on. This mortage is interest only....

This 25 year mortgage ran out in October 2012, and she has told us that they have let her have another three years before she has to pay back the money. She has no means of doing this. They have also increased her interest, so mortgage has increased by £200 per month. She is coping ok with this, she has two jobs and a lodger.

What are her options? I know she can sell and downsize, but the nearest property that she can buy would be 15 miles away, and I know she would not be keen to move away from me and my sister and her 'circle'. She has real issues with staying by herself.

I lived with her for two months in Nov/Dec, and we toyed with the idea of me and my daughter moving in with her for a couple of years. So I think I am open to that. Would I be able to help her out in any way?

I have a sister and she lives in rented accommodation with her family. I have a mortgage on my flat 54% LTV, and would be able to rent mine out. Consent to let wouldn't be an issue.. I earn 33,000 per year with other income of 4,000. My flat would rent out for 12,500 per year.

What are our options? My mum is sticking her head in the sand, and I think she needs to tackle this now rather than later. Ideally she would like to remain in the family home and selling it to be the last option.. I don't think she wants to leave as it was hers and Dads home and he passed away in July 2011.

Do we have options?

Thanks so much
Lo

seven-day-weekend

If she hasn't get the money to repay the mortgage than she hasn't got a lot of choice, has she? She will probably have to downsize. Surely there must be something she can buy for £200k nearer than 15 miles? Or she could rent.

She could try and remortgage to a repayment mortgage, although her age may be a problem, and the payments will be higher still. But at least she will be repaying the capital.

Moral: Don't have an interest-only mortgage unless you have the means to repay it!

RAS

Other thread https://forums.moneysavingexpert.com/discussion/4445229 for background

Johnandabby

It sounds like it's unrealistic to find £140k in 3 years, even if you move in. You might want to speak to an independent mortgage adviser about the scenario, as your mum's age is going to be an issue - you might be able to be jointly responsible for a new repayment mortgage, but do you really want to expose yourself financially to that? It's not a good situation to be in, particularly for you and your daughter...

Surely there's a property closer than 15 miles that needs a bit of work for £200k? You could get a short term loan to finance the work, and your mum could pay this off using the current mortgage interest payments.

Or even better, just get your mum to sell and rent somewhere. Monthly rent will be more than the current mortgage interest payments I assume, but at least she will have £200k in the bank to invest

Locana

Hi,

Thanks! Interest only - pah. When I found out I was soo mad. She said it was the 80's and thats what people did. Its a shame they didn't think of the consequences. Anyways, its too late now!

Rent in this area will be around 1200, so thats a no-no. I know it would kill her to move away from us, she really is too scared to move away. It s something she has suffered from since childhood.

I guess we could look at properties that need doing up nearer.. I'll have a look at that. I'll give the thread a read too.

Thanks
Lorraine

Mallotum_X

Where are you in the country that has no property under £200k for 15 miles?

Surely a flat must exist that is closer. What about her moving in with you.

Locana

Thanks RAS, but that was my thread! I put the info on this board for more responses, it was inappropriate over there. I guess I'm looking for other options with details.

Edit: Sorry RAS, you meant my thread for background! Ignore me...

Locana

Thanks Mallotum.

Properties under 200,000 in this are likely to be in high rise flats etc. She is just too scared to live in a flat. I Don;t know why, thats just how she is! I lived with her for two months as the lodger went away. She is that scared. Plus, I don't think she'll be left with 200,000 as the house may be sold for much less, plus she has debts to pay off.

Mine is a two bed property. Howver, Iam saving to buy somewhere bigger, with a view to renting out mine long term, so I guess she could move in with me but thats way in the future. I need to save about 30,000 for a dep..


Thanks
Lo

Johnandabby

Locana wrote: »

Hi,

Thanks! Interest only - pah. When I found out I was soo mad. She said it was the 80's and thats what people did. Its a shame they didn't think of the consequences. Anyways, its too late now!

Rent in this area will be around 1200, so thats a no-no. I know it would kill her to move away from us, she really is too scared to move away. It s something she has suffered from since childhood.

I guess we could look at properties that need doing up nearer.. I'll have a look at that. I'll give the thread a read too.

Thanks
Lorraine

£1200 a month? I guess you're in London then!

Do you have a spare room in your flat that your mum could move into?

Could you sell the flat, pool both your monies and buy somewhere together? Easier for you to get a mortgage than your mum if you need to top it up.

You could rent out your flat, but don't forget all the landlord costs (insurance, repairs, advertising etc), and the sheer bloody hassle of it all. Realistically you're unlikely to do anymore than pay the BTL mortgage from the rental income, so don't expect any extra income to pay a second mortgage.

Locana

Thanks Johnandabby.

My flat is 2 bed so no room. I am trying to save to buy another, with the intention of renting my flat long term. The flat is my pension if you like. But to buy another is in the way distant future.

Pooling our money is harder, I have a sister and I want things to be equal! If anything happens I don't want her to suffer, or if anything happens to me my daughter misses out. I would like it to be as fair as poss. So I guess advice on equally leaving property/money in wills would be good advice too, if we go down that road.

Thanks
Lo

jackyann

I would consider 2 options, depending on your relationship and how you (and your daughter) see the future:
1. You consider buying together, including the possibility of you buying into the family home
2. Your mum has to face the reality of her financial situation & cut her coat according to her cloth

I rather think the "moving in for awhile, helping out etc" idea simply delays making decisions - and at age 62 it's a good idea to make them sooner rather than later (I think she is likely to be getting her State Pension now or very soon?)

Sorry - yet again I have cross posted! I can see that it is complicated by your sister, but I am sure that can be sorted out fairly. However, I do think you need to consider how much of your mum's problem you want to take on.