Looking for some mortgage advice

rossross1976

I am trying to help out a friend but mortgages are not my strong point so thought I would turn to this forum in search of advice.

- mortgage was taken out in 1986 at a cost of £32250 plus interest
- in 1988, due to no fault of my friends, they fell into arrears & made minimal payments for the next 17/18 years. from what I can see the payments just about covered the interest & knocked off about £500 from the actual mortgage each year
- in 2006, the payments were increased to £180/190 & the mortgage is now sitting at approx £23000 plus interest with 14 years left to run
- my friend is due to retire in 9 years & would ideally like the mortgage repaid by then
- we have discussed increasing the payments & this is not currently an option, either is paying in a lump sum.

the above figures are very rough but give you an idea.

- I have suggested re-mortgaging at a lower rate however I am not 100% sure that this is the best option
- I have also read about mis-sold endowment mortgages however I do not think this will apply due to the mortgage being re-vamped in 1988 however I could be wrong. From what I gather, the mis-sold part is due to the endowment not covering what it was sold for.

Would you suggest going back to the bank & see if there is anything they can do?

As I have stated above, mortgages are really not my area of expertise, so any advice or suggestions would be greatly appreciated.

Thanks

bloolagoon

If they have such little disposable income would it not be best selling and renting?

ACG

Is the mortgage in arrears or is were the terms changed to interest only?
Im assuming the latter but if not it will restrict what can be done anyway.

An endowment is an investment - unless there were any guarantees I dont see how you can complain for a shortfall - but that was well before I became an advisor so cant give conrete info on that.

Any overpayments now, will help reduce the balance. Obviously £5 a month isnt going to make an impact but if there is any spare cash then the sooner he overpays the bigger impact it will have.

If he does not overpay on the interest only and has no lump sum coming to him, what does your friend think will happen at the end of the term? He will have to sell up and rent or downsize.

The more he overpays by now, the more money he will have if he is in that position. If the mortgage is say £5-10k by the end of the term, the lender may just allow him to carry on making overpayments as he has shown a history of bringing the balance down, but they do not have to do that. The lower the balance the more likely they are to do it I imagine. Also as interest rates are at an all time low, there is only one way they are going.

If he cant afford to overpay now, then hes going to be homeless when rates do rise as he will have to find the extra money from somewhere... im sure at this point all of a sudden he will miraculously find some extra money.

When rates came down, he should have been making hay and paying his balance down with the extra money in his pocket.

I think the best way of helping your friend is a bit of a reality.

dimbo61

£23,000 even at 5% over 9 years is £265 a month.
Your friend needs to find this money every month !
Will he get a pension when he retires ? Lump sum ?
Pension and lump sum should be money to live on not paying debts.
Has he got SKY or smokes ?

HappyMJ

As above all he needs to pay to clear this in 9 years is £265 per month. If he seriously cannot afford that then sell up and rent. The rent will be covered initially by the equity that has been released and once that runs out it will all be covered by housing benefit.