Brother in Law trying to get Mother in Law to sell house with 12k left

Pinecones

I'm looking for some advice for my MIL. We are going to CAB but wondered if anyone knew what options are avaliable for her or if anyone has been in a similar situations.

She was taken into hospital with pnumonia and now wants to give up work. Shes 66 and gets her pension. She'll be £300 worse off not working per month but we hear she could recieve pension credits.

Her house is worth around 150k she owes 12k and pays £74 a month mortgage but took out a 2k loan which puts monthly repayments to £160 pm.

Now her son is preassurising her to sell her house and downsize in order for him to get her inheritence early. 2 days after she came out of hospital he dragged her out to view a house which she hated! (Talk about jumping the gun!) she came home and cried she said she didnt feel this low even after 2 divorces. She doesn't want to move.

The problem is, how can she stay in the house? Can she release the equity because she owes such a small amount meaning that when she dies they take the 12k back?

I just don't see how moving is the best option, the physical and mentalmstress is no good, not to mention solicitors and movng fees.

Brother in law didn't like his mums reaction to the house yesterday and has now told me "we need to put the preassure on her to sell the house and rent somewhere" i couldn't believe what i was hearing! He's not thinking about what his mum wants at all. My feeling is we need to explore ALL options for her to stay whe she is, hapoy and in an are she knows.

I'm counting on you members to be abke to share some advice or experience on this issue. I want whats best for my MIL not my BIL.

ACG

Can she afford the £160 per month?
If not, then she can speak to the lenders to ask them if they can extend the term - for such a small amount and in the circumstances im sure they would - even if it meant having to make a complaint.

Your brother in law has no say over the matter, its not his house. Your mother in law needs to tell him to basically leave her alone unless hes going to be helpful.

Pinecones

ACG wrote: »

she can speak to the lenders to ask them if they can extend the term - for such a small amount and in the circumstances im sure they would.

These are the things i have no idea about, i'm 25 and rent with my husband. We've never had a mortgage and don't know what options she has. This is very reasuring. Thank you. The BIL likes to take control and so I feel I need options to give MIL so she can be in control of the situation.

holly_hobby

Pinecones wrote: »

Shes 66 and gets her pension. She'll be £300 worse off not working per month but we hear she could recieve pension credits.

This will help give you an idea if she is entitled to gted pension credit - if she is, she will also be entitled to apply for SMI (mortgage interest payment) - which may help until the mge redemption date comes up.

Obv when her mge term ends, she'll have to repay the outstanding capital of course which I assume this is an interest only arrangement ?)- as the lender generally can't extend an interest only mge indefinately (notwithstanding lifetime mge arrangements, discussed below) - but its worth an ask. If its on repayment, and affordability is there, there may be more scope.

Pension credit calculator -
https://www.gov.uk/pension-credit-calculator

SMI - guidance
https://www.gov.uk/support-for-mortgage-interest

Pinecones wrote: »

Her house is worth around 150k she owes 12k and pays £74 a month mortgage but took out a 2k loan which puts monthly repayments to £160 pm.

SMI, if eligible, will only be in relation to interest on the main mge and other loan if the loan was used to improve/repair the property.

Pinecones wrote: »

Now her son is preassurising her to sell her house and downsize in order for him to get her inheritence early. 2 days after she came out of hospital he dragged her out to view a house which she hated! (Talk about jumping the gun!) she came home and cried she said she didnt feel this low even after 2 divorces. She doesn't want to move.

At 66 she is no where near a dodery old woman, the fact is he can't make her sell her own, or sell it for her.

She needs to be firm and say she has no intention of moving.

I do fear his concern is that he thinks with the recent bout of ill health, she may well have to go into long term care at some point, and doesn't want her home (and his perceived inheritance) to finance it ..... but I may be wrong

Pinecones wrote: »

The problem is, how can she stay in the house? Can she release the equity because she owes such a small amount meaning that when she dies they take the 12k back?

Ok, she is 66 and has a 14k loan on a property worth circa 150k - the following is assuming the current mge is on an interest only arrangement..

Given the figs there will be a solution the form of an lifetime mortgage arrangement, which has no upper age, affordability assessment and typically has no monthly repayments (however there are providers whom do permit interest repayment), with unpaid interest rolled up onto the os debt BUT the inheritance of her benefeciaries will obviously over time be gradually eroded (unless she chooses to make monthy payments to ringfence the debt and protect the equity).

2 schemes ....

Lifetime Mortgage (largely as described above)
or
Home Reversion Scheme - where instead of the interest being rolled up, Mum would effectively sign over a % share of property equity to the lender, in exchange for the capital advance. Again no monthly repayments, or affordability assessment with this.

Lifetime mges and Home Reversions are designed to be repayable upon death or entry into long term care, with the interest and fees on a lifetime mge being higher than that on traditional residential arrangements, so this must be a carefully considered decision (inc ensuring any provider selected has a no negative equity gte).

Lifetime mortgages are a specalist area of advice, so if she wants to explore this, ensure that the adviser is suitably qualified and authorised to act in this market.

(have a google, or have a look at SOLLA, whom have details of independently audited advisers in your area -http://societyoflaterlifeadvisers.co.uk/, or equity release council will also help with the search and guidance on such arrangements - http://www.equityreleasecouncil.com/home/)

Alternatively, she could consider changing over to a repayment mge (subject to her acceptable income being sufficient) over an affordable term, which may exceed her own, and most lenders max redemption age of 75 yrs (although there are 1 or 2 providers whom don't have this ceiling, but her low loan requirement of 14k may well cause an issue in placing - your broker will guide and may be able to get it through on mandate).

This would be a traditional mortgage,, with no interest roll up/sign over of equity - which will avoid the beneficiary issues that brings BUT of course she will have to continue paying the mge until either death, sale or redemption.

I would suggest Mum visiting a broker with regards to how she may manage the 14k mge debt, if there is no repayment vehicle, or access to funds at scheduled redemption facilitate this.

Hope this helps get the ball rolling ...

Holly x

Pinecones

Wow, thank you for all the information Holly. I must admit some bits I don't understand but I will write it down to take it to CAB with us.

Im assuming the best thing we can do first is fill out a detailed budget and go from there with regards to working out entitlement to pension credits etc.

holly_hobby

The pension credit calc link I have included above, will tell you what entitlement she has once completed.

H x

Pinecones

holly_hobby wrote: »

The pension credit calc link I have included above, will tell you what entitlement she has once completed.

H x

Thank you, i've checked it out now. I thought it might ask for more information. I've written all this inf down for MIL and hoefully she will feel as if she has a bit more say/control over the situation. Your help has been invaluable.

wannahouse

Pinecones wrote: »

These are the things i have no idea about, i'm 25 and rent with my husband. We've never had a mortgage and don't know what options she has. This is very reasuring. Thank you. The BIL likes to take control and so I feel I need options to give MIL so she can be in control of the situation.

could you borrow/come up with the small amount of money, tp pay the rest of her house off, so she can live in it till she is ready to make other choices, and get an agreement that this money will come back to you when the house is sold???

this is what i would do, if it was my mum, as i would hate for her to be forced out over such a small sum by a greed sod!!!

Anonmouse

Surely your OH needs to have a serious chat with your BIL and tell him to stop being such utter scum.