Mortgage ending. Cannot pay the balance
Fraserca
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Hi, I have a friend who has a house where he has lived for many years. When his mother died he inherited a half share but in order to remain in the house he had to buy his sibling's share. He took out a mortgage with the Woolwich. There is still £60k outstanding. The house is worth about £170k.
The mortgage is to be repaid in about 3 years time. The Woolwich are saying that he can't extend it or take out a new mortgage because of his age. He is in his late 60's and on a declining income.
The Woolwich say that he will have to sell the house to pay them.
Are there any other options ? Will any bank lend him the £60k he needs to remain in the house and accept interest only payments until he pegs it ?
Thanks for any comments.
The mortgage is to be repaid in about 3 years time. The Woolwich are saying that he can't extend it or take out a new mortgage because of his age. He is in his late 60's and on a declining income.
The Woolwich say that he will have to sell the house to pay them.
Are there any other options ? Will any bank lend him the £60k he needs to remain in the house and accept interest only payments until he pegs it ?
Thanks for any comments.
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However it has to be said that if you cannot repay what you are contractually to do so they do have the right to sell to get their money back.
Is there no family member that may want to buy a % of the house?
Has he explored that option of selling his house to a 3rd party but then still living in it for the rest of his life? It screws over the heirs of course but I wouldn't worry about them!
Other option is of course just to sell and then downsize. Can he get a decent house in the area for £110k?
I would be surprised if a bank would help him financially as his age is unfortunately against him.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9563141/Equity-release-elderly-warm-to-unlocking-cash-from-their-homes.html
1. selling up and buying something cheaper
2. equity release - the interest is rolled up and paid from the proceeds when the property is eventually sold.
3. His relatives help him out now. Whoever will inherit when he passes on in the fullness of time, may see a financial advantage in helping him keep the home now.
Perhaps he was ill advised and may have a claim?
Ride hard or stay home :iloveyou:
With a declining income and possibly insufficient income he may qualify as a "trapped customer" and merit protection from treatment like raising the interest rate compared to other customers.
How tight is his income situation? Is it possible for him to manage repayment mortgage payments with an end date of say age 85? That would cost around £500 a month at 6% mortgage interest rate, a reasonable long term assumption. If he is able to manage that he should have a fair number of options involving the Woolwich or another lender, since there are some who do loans until age 85.
If that is unaffordable an equity release mortgage is likely to be the best option using standard products. The question there will be whether the value of the property is high enough to get an equity release of the £60,000 currently needed to clear the Woolwich mortgage. If it is, that will do the job. It appears that this is just about possible. I tried age 68 at an equity release calculator and that gave around £57,000 available in normal health or £63,000 with less than normal good health. The available amounts increase as people get older, so this is quite likely to do it by the time he needs the option.
Another option is to move to a cheaper place, both in value and in running costs. That could substantially decrease his costs and make it possible to repay any remaining mortgage amount. It's one of the best available options because it makes his general financial situation better due to the lower costs.
Failing those normal options, another is to force Woolwich to try to repossess while he is making payments at a level that covers all interest and will eventually clear the mortgage, even if only on death.
it could pay help him pay his mortgage off completely within a few years alongside what he is also paying.
is he getting all the pensions/benefit that he is entitled to?
it would allow you to stay in the property and pay a reasonable rent to the local housing association. plus you would have a few bob in the bank.
https://www.gov.uk/mortgage-rescue-scheme
Sometimes age just shows up all by itself
In the end, it's not the years in your life
that count....it's the life in your years