Interest only woes

Money_Bunny

Myself and others are very concerned about a friend who seems very down. She is being increasingly open about her financial situation and an alarming picture is emerging.

She has an IO mortgage of about 150k, no repayment vehicle and equity of about 30k. She is in her late 60s and the mortgage ends when she is 75. I suggested she make overpayments but she said she couldn't afford it.

I've heard the term 'lifetime mortgage' - would that be viable? Failing that, is she only left with handing the house back at the end of the mortgage? In which case, would the council house her?

Her son lives with her. I think it may have always been intended that at some point he would take out a mortgage on the house in his name. Would this be a runner? Problem is he has no income and it isn't looking much like he's going to start earning in the next few years - he's a bit !!!!less and the likely cause of my friend's financial situation.

So, help, please.

And thanks

Mortgage_Mark_2

Firstly if he has no income, he can't get a mortgage. Full stop.

Things like lifetime mortgages and home reversion schemes are a whole other world to the 'regular' mortgage market so I'd google it and contact a specialist.

ladeeda

I would be quite concerned how that was allowed to happen in the first place. The method of repaying should have been outlined when the mortgage was set up. Seek help asap

dimbo61

Looks like you friend will have to sell up in a few years and move into a rented property.
Plenty of over 60,s properties.
Son will have to get a JOB

Jenniefour

Terrible situation and I'm not surprised your friend is depressed.

Your friend needs to start putting herself first and making a plan for her future. She might be better off selling and then renting somewhere for herself. Without her son. Then at least she would have a nest egg/safety net. And she would probably find it a relief to know she can manage financially without the burden of a mortgage that she has no hope of paying back. This option might actually cost less than she's paying in interest now, if she's willing to downsize.

I doubt very much whether she would be eligible for the equity release type schemes as she has little equity in the property.

It would be much wiser to make a plan now rather than wait until decisions are taken out of her hands. Or worse, like getting involved with the property companies who prey on the vulnerable by buying the property with the promise of a lifetime tenancy - which usually turns out in the small print to be a few years. And have a habit of knocking the price down at the last minute.

Are there any other family members who could help her to consider best options? She needs to be able to sit down and discuss her financial situation in detail with someone who has some savvy, will take everything into consideration and have her best interests at the fore. Which excludes her son.