Is my home going to be taken away? (2nd mortgage)

maninthestreet

How long does this second mortage have to run before the debt has to be paid off completely - 5 years?

Radiantsoul

There are probably going to be loads of options. The mortgage company will ultimately be repaid when the property is sold and so are unlikely to do a deal, unless there is some problem with their charge(missing paperwork, etc) but this is unlikely to be fruitful for you.

The mortgage company will need court proceedings to get possession so it will take time. This takes time and gives you time. They may be prepared to offer a debt counsellor for example.

Ultimately your options are:-
1. Sell and release a substantial amount of money. It sounds like your parents are living like paupers sat on a goldmine.
2. Equity release
3. Borrow those who stand to gain when your parents estate is realised

The bank may simply do nothing and wait until the property is sold, but that is a big risk and doing nothing without checking with them is not good. I would suspect they would require at least token repayments.

A baliff would not have visited without a court order. Are you sure that proceedings have not already started or perhaps this was a debt counsellor?

jamesd

Since this went to court already it seems that at least some facts are clear:

1. they owe the money.
2. by not paying anything they are effectively forcing the lender to try to repossess and force a sale of the property if the law allows them to.*

What they or an agent of theirs - you? - should be doing is trying to come to some agreement with the lender. Maybe token payments followed by repayment from the estate after the second death, though the lender won't like this for people only in their seventies unless their health is bad.

Given the value they could perhaps take in a lodger to help their finances and make some faster repayment rate possible, while also increasing their income a bit. Depends to some extent on whether they are on means tested benefits or not.

If a family member can afford it and wants to help them stay in the property another option is for the family member to take out a mortgage secured on the property. The couple living there would also have to be named on the mortgage and the family member would have to be a partial owner of the property somehow. The family member might then have a lodger staying in their part of the property and use their income from that to repay the mortgage.

Unsecured loans taken out by multiple family members might be another way to handle it but the question is whether these will be gifts or if not, how they will be repaid?

Changing property is the neatest self-sufficient solution. With £600,000 in the property they can get probably get more than £6,000 a year of income per hundred thousand freed up in a sale and purchase of cheaper property. That's assuming investments are used and there's some desire not to deplete the capital to much. A lot more can be taken as a combination of capital and income depending on how long they might live if they just want to enjoy their money and stop living on a low income. An IFA could assist with this sort of planning. In many ways this is the best approach, for it helps with both income and debt, potentially substantially improving their quality of life. If they don't mind gradually draining the capital, moving to a property of half the value could end up clearing the debt and getting them an income of over £20,000 a year plus their state pensions if they are willing to plan on running out of capital at say age 100.

This exchanging of the property for a cheaper one plus much higher income is probably the best option for their quality of life. Particularly if it would be good for them to have a place that's easier to live in if they have any physical limitations. It's perhaps worth doing some internet shopping around and seeing what's out there on the market that might prove interesting, to give them some options to consider.

*there are some unlikely cases where it may not be possible for this to happen but the costs of pursuing those would probably be greater than the cost of paying off the loan. And it'll have to be paid off at death anyway.

Hudson1984

curious as to what benefits you can claim with a 600k house paid off? surely the right thing to do is sell up pay the debt and live on the excess? sorry to be rude but claiming benefits and using that to pay loan payments when there is a £600k asset sitting there seems like a boot up the bum of the system.

Let_Us_See

At your parents' age I can understand 1) not wanting to move 2) the anguish they must be facing every day.

If they want to fight then fine. However, if they decide it is time to settle and get on with their lives, then a lifetime mortgage is instantly available, which will clear all debts, will have little affect on their estate and end all anguish and turmoil.

Why fight a war you are ultimately not going to win. Move on!

starbarboy

Hudson1984 wrote: »

curious as to what benefits you can claim with a 600k house paid off? surely the right thing to do is sell up pay the debt and live on the excess? sorry to be rude but claiming benefits and using that to pay loan payments when there is a £600k asset sitting there seems like a boot up the bum of the system.

So we should all pay taxes and National Insurance all our lives to never see any return on them when we need to? Only the wealthy should be able to stay in their stately piles while the rest of us are forced to downsize and live off their only assets (which they will also be paying inheritance tax on when they pass away)?

Just a thought...

Anyway, in response to the original poster, I hope you manage to find a solution to your parents problem. Although not an ideal solution it does at least sound like there may be options available.

Best wishes

Stephen

silvercar

This is my parents home. They are in their late 70's. Very tiny income from benefits. Mortgage had been paid off in full before the second home loan was taken out.

I would be inclined to get your parents to give you written consent to deal with this on their behalf. Clearly they find it stressful which is why they have been in denial.

Then you need a discussion between you and your siblings as to whether you can all raise the money between you, to be paid off from any inheritance or property sale.

If that is not possible then you could consider equity release or similar.

The other option is support for mortgage interest (SMI) which is the equivalent benefit to housing benefit but for owners not renters. Rules are strict and I don't know if your parents would be eligible.

Do check that your parents are receiving all the benefits and pensions they could be entitled to.

Reactor_2

I think the owners of the property should sell it and pay off their debts and downsize.

It looks like the owners didn't like the terms of their agreement and then decided they won't pay, thinking this would invalidate the agreement. The owners could have just switched to another competitive product in the last 20 years, but chose instead to pay nothing. What kind of people do this?

One thing I'm sure of, if I had lent the owners the money and then they decided they won't pay me back, I wouldn't be impressed. And that is stating it respectfully.

Do the right thing and move on.


I also feel the need reply to starbarboy

starbarboy wrote: »

So we should all pay taxes and National Insurance all our lives to never see any return on them when we need to? Yes. These are taxes not investments.Only the wealthy should be able to stay in their stately piles while the rest of us are forced to downsize and live off their only assets (which they will also be paying inheritance tax on when they pass away)?Yes, if legitimately obtained. It's unfortunate that the wealthy have more resources available to them than the average person

Here's a question for you starbarboy: if you pay more tax than me, should you get a better service than me from the government?

Hudson1984

starbarboy wrote: »

rest of us are forced to downsize and live off their only assets (which they will also be paying inheritance tax on when they pass away)?

No one was forced to take a loan out and no one forced them not to pay. And with £600k of assets they are surely considered wealthy! so in that ilk are they not wealthy people claiming benefits to stay in their stately pile? No pensions? they have £10k to their name - why wasn't this used earlier to not be in this situation? I also cannot see how the payment has "ballooned" it has been there for 20 years!

i'm sorry they need to sell and pay up. It can't be dodged, even the court has ordered it.

silvercar

Hudson1984 wrote: »

No one was forced to take a loan out and no one forced them not to pay. And with £600k of assets they are surely considered wealthy! so in that ilk are they not wealthy people claiming benefits to stay in their stately pile? No pensions? they have £10k to their name - why wasn't this used earlier to not be in this situation? I also cannot see how the payment has "ballooned" it has been there for 20 years!

i'm sorry they need to sell and pay up. It can't be dodged, even the court has ordered it.

Equity rich, cash poor!

I wouldn't call them wealthy.

Selling up can be avoided, mainly dependent on the views of their children.