Do you HAVE to use endowments to pay off M'gage?

bob_dob

Let_Us_See wrote: »

Come on, lets move on with this. Forty nine posts and we are still hacking away at the periphery.

Main problem is that "parents" are £6,000'ish short of the required funds to redeem their mortgage at the end of the term. Simple. At their age an interest only (payable) lifetime mortgage immediately solves the problem and takes away the current stress. There is no rolled up interest to reduce long term equity as the interest is paid monthly, no term limit which enables them to save, as and when possible, to repay capital (if they want to).

Stop fudging and take positive action.

Let Us See: Why don't you calm down and, if you don't like what you see, then mind your own business. Nobody asked you to post your comments, if you don't like what I post, leave. 'Stop fudging and take positive action'? They are my friend's parents, what do you want me to do? Get a shot gun and make them do something? They have written asking for an extension and they are old. Leave them, and me, alone and leave the other wonderful people on here to continue to help me/them.

dimbo61

Well fingers crossed they get the extension for 5 years.
As each one of the endwoments matures they need to pay the whole amount straight off the mortgage.
With the £50 they were paying for the endowments each month and the much reduced INTEREST ONLY mortgage payment they should be able to clear £1000 a year over the next 5 years.
If you can check any other ways to save money VERY MSE ie buildings/contents insurance, SKY, Gas/electric, home phone etc

JimmyTheWig

dimbo61 wrote: »

and the much reduced INTEREST ONLY mortgage payment they should be able to clear £1000 a year over the next 5 years.

Unfortunately for them the interest on their mortgage is currently being paid for them, so they won't personally see the gain from reducing their balance in terms of having more money each month to pay more off.

JimmyTheWig

Something I've been thinking about this issue is if the "deliberate deprivation of assets" rule would come into it in terms of future benefit payments.
E.g. if they don't have to use the endowments to pay off the mortgage and are able to get an extension, will they get penalised if they use the endowments to pay off the mortgage? If they don't use the endowments to pay off the mortgage straight away and put the money in an ISA (as was a suggestion at one point to gain interest and keep the full mortgage interest being paid) would that be even more of a risk from this point of view?

Let_Us_See

bob_dob wrote: »

"if you don't like what you see, then mind your own business. Nobody asked you to post your comments."



"Leave them, and me, alone and leave the other wonderful people on here to continue to help me/them."

So, posting on this forum has changed to invitation only?

Personally, I believe you are suffering from information overload and I don't think you could recognise help if it bit you on the backside. Currently, you are going in circles, and even after 50 posts you are no nearer reaching a solution to your original post.



What you failed to understand is that there is a very simple everyday solution to your friend's parents dilemma that:

1. Does not rely on a lender granting an extension of term
2. Puts parents in control of their future plans
3. Has no income or affordability issues
4. No retirement/age issues
5. Interest only not an issue
6. No restriction in term
7. Based on a £6,000 expected shortfall this would equate to an interest only payment of £30.00 per month
8. End to current stress and further anxiety

Perhaps after another 50 "what if" posts you might see the light? Perhaps not!

zzzLazyDaisy

JimmyTheWig wrote: »

Something I've been thinking about this issue is if the "deliberate deprivation of assets" rule would come into it in terms of future benefit payments.
E.g. if they don't have to use the endowments to pay off the mortgage and are able to get an extension, will they get penalised if they use the endowments to pay off the mortgage? If they don't use the endowments to pay off the mortgage straight away and put the money in an ISA (as was a suggestion at one point to gain interest and keep the full mortgage interest being paid) would that be even more of a risk from this point of view?

The mortgage capital is due and payable and the endowment money is intended to cover that debt. Provided this is done now, there is no way that this would be viewed as deprivation of capital as it falls squarely within what is allowed.

On the other hand (as has previously been pointed out) putting the endowment money into a savings account may take them over the capital limit for getting means tested benefits, including mortgage interest relief. Once they have actually put the money into their bank account and obtained an extension on the mortgage, the debt is no longer due and payable, and taking the money out at that point to pay the mortgage down in order to be able to claim benefits again would almost certainly put them in the deprivation of capital arena.

Do also bear in mind that universal credit is about to come in, nothing is certain or safe about state benefits, no-one knows for certain what will happen, but you can be sure the system won't be getting more generous any time soon. Banking on state mortgage interest relief being available for the life of any extended mortgage is a very risky strategy indeed, in my view.

OP/they are over complicating things. The mortgage is due and payable. Use the endowment money for what it is intended and pay off the mortgage. And start talking to the lender about what arrangements can be made to pay off the shortfall as a matter of urgency, before the lender starts taking steps to repossess!

ValHaller

bob_dob wrote: »

Let Us See: Why don't you calm down and, if you don't like what you see, then mind your own business. Nobody asked you to post your comments, if you don't like what I post, leave. 'Stop fudging and take positive action'? They are my friend's parents, what do you want me to do? Get a shot gun and make them do something? They have written asking for an extension and they are old. Leave them, and me, alone and leave the other wonderful people on here to continue to help me/them.

I don't know if you consider me to be one of the wonderful people, but I find the post from LetUsSee to be entirely acceptable. Whether or not I agree with them, I can definitely see that they have a valid argument which should be heard - and quite justified too to be expressing some frustration that no one has raised their take on it - the frustration is as much if not more at the wonderful people as it is at you.

If someone is rude to you, then fair enough. But it is bad form to tell someone to leave a thread when you do not like their answer. You posted, others have answered - they don't have to, but you should respect them all even if you disagree.

holly_hobby

ValHaller wrote: »

expressing some frustration that no one has raised their take on it - the frustration is as much if not more at the wonderful people as it is at you.

Not raised as a solution, due to 6k being below the min loan for a Lifetime Mge Arrangement (LMA), which whilst some providers may have a min loan of 10k, many have a min arrangement of 20k - and not all, esp those with a 10k min loan, actually permit the payment of interest to effectively ringfence the debt, so then we're also rolling up interest and effectively increasing the overall debt and equity erosion.

Of course one could borrow the min sum to meet the requirements, and then immediately pay the unrequired surplus back off the mge, but then the individuals are into ERCs which on LMAs are hefty due to the nature of the beast.

Alternatively, pointless putting the extra borrowed into a deposit account and reaping the interest, as it would need to have a net rate of return in excess of 6% to make it work, and the retained capital and interest would be assessed as part of any MT exercise.

Thats why I personally didn't raise LMAs in this case (if thats what the above comment was eluding to), although I frequently discuss them on the forum. As in this matter I felt it would just unnecessarily confuse the OP (notwithstanding min loan issues), when at this point it may not be reqd, IF we can get an extension on std resi rates which are currently some 3 or so points less than any applicable LMA payrate.

Hope this helps

Holly