My retired mothers interest only mortgage expired - please help! :(

TLOR

The bank has just written to my mother informing her that he interest only Mortgage has expired (May 1st!) and the capital is now due!

She has no vehicle in place to pay this off and she is retired so almost certainly won't be able to extend the term (she gets £90 a week and the mortgage is £300+ per month as its about 80k).

I know this is a bad situation and she should have seen it coming but I would appreciate any advice on what limited options she has with the bank, and how much time she will have to sell the property and downsize (which she is ok with). She is with Halifax which I have heard may show leniency but I doubt it.

We really want to avoid a bank repossession but in the current market the property could of course take many months to sell.

Any help would of course be much appreciated

opinions4u

First of all, come clean on her income. She gets more than £90 a week.

Secondly, talk to Halifax. There may be an interim solution but that will probably only buy time between now and selling up.

holly_hobby

There is an option, if she has sufficient income, to switch to a repayment mge, and (assuming she is later in life which will restrict term) move to a lender whom doesn't have such a restrictive max age as Haliax (which is 75 at redemption).

Alternatively, if she is older than 55, and her income isn't there for a traditional resi mge, she has a low LTV (say below 30%), she could consider moving onto a lifetime mge - where there is no requirement for monthly repayments (interest is rolled up onto the debt), and she'll remain resident for life or until entry into longterm care. Points to note on an arrangement such as this, is obvious erosion of free equity from rolled up interest (although there are a lender or 2 whom permit the payment of interest on a monthly basis to effectively ringfence the debt and prevent such erosion). As a specalist area of advice, Mum should seek advice from a qualified and regulated equity release adviser to ensure its the right solution for her and her family.

Alternatively, the clearest solution is to sell up and either downscale for cash or reduced mge (notwithstanding age as discussed above), or go into rented.

If she is getting older,renting or even shared ownership, may be an added benefit in that the cost and effort reqd in maintenance and upkeep - is the landlords - and if she decides she isn't enamoured she isn't as tied down as with an owned property.

First things first, speak to Halifax see what their options are inc any temporary term extension to enable sale, and then consider the above if necessary.

Hope this helps

Holly xx

Thrugelmir

TLOR wrote: »

We really want to avoid a bank repossession but in the current market the property could of course take many months to sell.

Then be pro-active in selling the property. The bank may well grant an extension. However the onus will remain on the borrower.

Simon_gloster

As the above post states, usual protocol is to extend the term by 3 to 3 years in order to find time how to repay the loan. Documents will be signed by the borrower to state full and final payment on or before s certain date. If nit, proceedings will start to take place and charges/fees added.

In the short term she'll be fine but staet acting on it now as it's a big debt to be able yo convert to repayment on with the low income stated.

property.advert

Why don't you buy it from mama ?

holly_hobby

property.advert wrote: »

Why don't you buy it from mama ?

Because if purchsed with a mortgage, she would not be permitted to remain resident post completion (regardless of whether pch would be facilitated via a residential or regulated buy to let mge).

So doesn't solve her immediate problem.

Hope this helps

Holly

ch3101

I'd advise you get all of your papers and sit with her while she phones the bank.
Explain the situation and they'll be able to help - somehow.

dimbo61

My Dad sold his house and moved into over 55,s sheltered accommodation.
He released the equity in his old property and has enjoyed many holidays with his savings.
Maintaining a property while surviving on a pension is another added burden your Mum does not need.
Get the property on the market and take your Mum to visit a few retirement apartments or she could move in with YOU!

Annisele

If the mortgage is £300 a month and her income is £90 a week, how has she been paying the mortgage up to now?

If that arrangement is sustainable (and the lender agrees), then the lender might be happy to agree an extension, initially for a year or so.

TLOR

Hi everyone,

Thanks for the replies, much appreciated!

My mother is indeed on £90 per week, not sure why anyone would lie about such a thing!? :S

My father is still working and contributes to the bills of course but a) he is 67 and is hoping to stop work as soon as possible as he can't continue and b) he is under payplan so there is ZERO chance he could be added to the mortgage.

We know therefore that she can't extend the mortgage, she wouldn't be interested in any of the live rent back schemes as she has heard too many horror stories and I also don't think they are good value.

She is going to meet the bank tomorrow but sadly I'm not in the same city so she has to go it alone, I just want to know what normally happens in these circumstances with regards to the bank in case they try to mislead her! Does anybody know how long the bank normally gives, I have read articles that suggest they are supposed to act with restraint and repossession is a last resort but how long are we talking, weeks, months? Is there any guidelines I can compare their response too?

If worse comes to the worse I could possibly purchase the house for her, Holly you indicate that this wouldn't resolve the issue above but I didn't understand exactly why, please could you explain?

Regards