Interest only

rizlaking

I hope somebody can help me and thanks in advance for taking time to read this thread.

My mother and father purchased a property in the early mid 70's for around the 20 grand mark. Not long after there relationship broke down and she ended up on a manageable interest only mortgage to meet the repayments. The property is worth 120-150 grand now and she still has an outstanding amount of 19500. She is now 70 years old.

Three years ago the mortgage came to fruition an extension was granted on the mortgage which has recently expired. The lender is asking for full payment, or a payment plan to clear the debt, which is understandable. Obviously she does not want to have to sell the property or worse case a repossession order by the lender.

I have assets that I could cash in and pay it off, however new business investment has tightened my cash flow at this time, so a request was made for an additional year from the lender which was unfortunately declined.

I really don't understand the lenders eagerness to recall the debt considering the equity in the property is five times the debt. The lender will always receive the money back whatever route is taken. And in the mean time they are receiving an interest payment on time and has never been defaulted on. money for old rope if you like. In fact if you was privy to facts and figures then you would see that they have already recouped 29000 back on a 20000 debt.

I know equity loans are available but my mum contemplated this three years ago and I advised her against it, and gave her what she needed, in the way of financial support, lump sum, and a new car.

My position could well improve in the next 18 months and cash flow may be more readily available, my brother is waiting on quite a large PPI claim to be paid, but we need some possible other options now. I would be really grateful if you can submit some ideas or avenues we could maybe explore.

R_P_W

So what has been done during the three year extension to plan to pay off the balance?

From a lenders view, they have already extended (has any of the capital been paid back?). At what point do they get their money?

rizlaking

With the greatest respect and to answer your question, please read my original post. I will either pay the debt by whatever means necessary or they can accept the fact that the equity in the property is going nowhere, and keep taking the interest until my position changes in the coming months.

If my position does not change then 'whatever means' comes to the forefront. I appreciate your stance, however I need options rather than trying to interpret why a lender is reeling in the fishnets when they have plenty more to catch.

Wobblydeb

I am not sure why you are against using an equity release scheme to repay the existing lender. As I see it, as long as an appropriate scheme is chosen, the new lender is more set up to accommodate your mother's situation and will not be pressing for repayment of capital.

Obviously they have had a bad press at times, but my understanding is that there are some reputable providers. Perhaps a look at the Age UK guidance might help?

http://www.ageuk.org.uk/money-matters/income-and-tax/equity-release/

rizlaking

Thanks, you are right I have not looked into it and made assumptions. My mum is visiting this weekend and I will have a good read on the link you posted.