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

andy.m_2

blimey that must be some sized house to be £80k 25 years ago, and suffered a massive HP crash since to be only worth £100k now.

That's some bad luck right there, sorry to hear that...

macman

andy.m wrote: »

blimey that must be some sized house to be £80k 25 years ago, and suffered a massive HP crash since to be only worth £100k now.

That's some bad luck right there, sorry to hear that...

The OP's mother may have remortgaged at some time since the original loan, we don't know.
The issue is the lack of a repayment vehicle for 25 years, and her minimal income; not the size of the mortgage, which at £80K is not exceptional.

holly_hobby

The Halifax lifetime mortgage was the Retirement Home Plan, and was withdrawn for new entrants in 2011.

Jimbo thats really interesting news, in that Halifax are offering to extend the term by a further 40 yrs - in effect (for older applicants) giving the mortgagor an interest only without age restriction (which is 75 for their standard schemes) .....

I haven't personally come across this (yet) as a solution for IO borrowers at the end of term with no vehicle (although YBS did several yrs ago offer true IO mges (no vehicle) with a max term of 40 yrs and without any age restriction ... so Halifax are possibly using this model).

If this is the case, that holds a lot of hope for individuals, bearing in mind that essentially the mortgagor is in breach of contract, if they don't repay the mge upon demand (ie at the end of the schedueld term) - and the lender having every right to seek a possession order if the debt is not repaid as requested. Could you give guidance on how you are aware of this new approach be administered from Halifax (LLoyds BG), and what the qualifying criteria would be ? Thanks.

OP if Halifax don't offer Jimbo's solution, at 80/100 (80% LTV) - the lifetime mge arrangement I originally floated is a well and truly a very dead duck - unless your family could help reduce the LT mge reqd to circa 27k (which may be a tall order).

Macman - Andy is referring to the os mge, but the house value itself. In that it was purchased for 80k some 20 odd yrs ago, and seems over that period, to have only increased in market value by 20k - which is very low (and could be for several reasons).

Yes - 20k (assuming all associated selling and conveyencing costs will come from other capital) won't buy much/anything outright ....

So assuming that Hi

So we have 1 of 2 options the OP can directly consider, a shared ownership arrangement (as I prev mentioned), which will give at least give the OP some security of tenure OR go into rented (private or Housing Association/Local Authority).

Re the purchasing of the property for the OP to remain resident - this would need to be a cash purchase (assuming the purchaser is happy with the issues already discussed).

Hope this helps

Holly

macman

holly_hobby wrote: »

The Halifax lifetime mortgage was the Retirement Home Plan, and was withdrawn for new entrants in 2011.

Jimbo thats really interesting news, in that Halifax are offering to extend the term by a further 40 yrs - in effect (for older applicants) giving the mortgagor an interest only without age restriction (which is 75 for their standard schemes) .....

I haven't personally come across this (yet) as a solution for IO borrowers at the end of term with no vehicle (although YBS did several yrs ago offer true IO mges (no vehicle) with a max term of 40 yrs and without any age restriction ... so Halifax are possibly using this model).

If this is the case, that holds a lot of hope for individuals, bearing in mind that essentially the mortgagor is in breach of contract, if they don't repay the mge upon demand (ie at the end of the schedueld term) - and the lender having every right to seek a possession order if the debt is not repaid as requested. Could you give guidance on how you are aware of this new approach be administered from Halifax (LLoyds BG), and what the qualifying criteria would be ? Thanks.

OP if Halifax don't offer Jimbo's solution, at 80/100 (80% LTV) - the lifetime mge arrangement I originally floated is a well and truly a very dead duck - unless your family could help reduce the LT mge reqd to circa 27k (which may be a tall order).

Macman - Andy is referring to the os mge, but the house value itself. In that it was purchased for 80k some 20 odd yrs ago, and seems over that period, to have only increased in market value by 20k - which is very low (and could be for several reasons).

Yes - 20k (assuming all associated selling and conveyencing costs will come from other capital) won't buy much/anything outright ....

So assuming that Hi

So we have 1 of 2 options the OP can directly consider, a shared ownership arrangement (as I prev mentioned), which will give at least give the OP some security of tenure OR go into rented (private or Housing Association/Local Authority).

Re the purchasing of the property for the OP to remain resident - this would need to be a cash purchase (assuming the purchaser is happy with the issues already discussed).

Hope this helps

Holly

Where does the OP say that it was purchased for £80K? They simply said that the mortgage is currently £80K and that the value is about £100K. Mother may well have remortgaged at some point to borrow against the equity-we don't know. Nor do we know what the original mortgage arrangement was.
We have to accept the OP's premise that the current value is around £100K. Even if were say, £110K, that doesn't materially alter mother's situation-she's not in a position to purchase another property on her own, even if she had the deposit, because her income is only £4,320pa.

holly_hobby

A remortgage wouldn't affect what the property is worth, just the free equity in it.

Nope it isn't rocket science to see that 20k won't buy a property outright, but it may pch a shared equity arrangement with a HA, which as I say will give them some security of tenure.

Holly

TLOR

Thanks for some great responses to this thread, let me clarify some issues and provide an update.

I believe my mother purchase the property originally for around 40k, this was a replayment mortgage which is now down to about 29k. She took an additional secured mortgage out 5 years ago on a 5 year interest only basis which took the total up to circa 80k as mentioned. I only left this info out because I thought it wasn't essential to the query I had, hope this helps.

My mother went to the bank yesterday morning as I advised and Halifax have agreed to the following:

- 6 months to put the house on the market
- 12 months to sell the property
- She must sign an agreement that outlines these conditions and acknowledge that Halifax will repossess the property after 8 months if she fails to comply (not seen this document yet)

My feeling is that she did quite well and this seems like a fair option as my mother did after all fail to understand/comply with the terms of the interest only mortgage. But of course I would be interest to hear other opinions?

I would like to purchase an alternative property (single floor bungalow) that my mother could move to during the next 18 months as others have noted she will probably end up with less than £16k in assets so should be eligible for rent payments, does anybody know what the maximum "housing benifit" equiv is for couples on a pension? (yes I have also advised her to speak to social ASAP).

To be honest the social housing options don't look great, and private rental comes with long term uncertainty so the above seems like the best solution but again I'm open to other alternatives (staying in the current home and rent back wouldn't be a long term fix as it is two floors, and to big for them to manage/afford)

Thanks again

andy.m_2

Surely she wouldnt get HB in one of your properties?

TLOR

andy.m wrote: »

Surely she wouldnt get HB in one of your properties?

I already rent a house to my sister and as long as there is a tenancy agreement in place and the property is let on a commercial basis it is not an issue. The only caveat to that is that it has to be a different property, I is not possible to do that on the current property.

macman

So £29K of that £80K is still on a repayment mortgage? When does that term end then?
I have to ask-where has the £50K gone that she borrowed 5 years ago against the property?

Cornucopia

It does seem as if there has been persistent and repeated bad advice.