Mum's Mortgage

GoodSon

Hello - a bit of advice sought for my mother.

When my parents retired in 2000 they moved house and took out a mortgage with the Halifax for the difference between the old house and the new. It's was one of those interest only deals where the equity never gets paid off and goes back to the Halifax on disposal - designed for pensioners, I believe.

Anyway my Dad always regretted doing it and never paid anything down to reduce the loan amount.

My Dad passed away a couple of years ago and there were a few ISA's and such that he left, as well as half his occupational pension and his state pension record also boosted Mum's pension - so all-in-all, so does ok and has no money worries.

She is now thinking that she would like to start reducing the amount owed to the Halifax so that there is more to pass on in the future. She would like to do this monthly and is also happy to pay down a lump sum is required, but not all of it

Right (thanks for staying with me so far), my question would be, is there a mortgage vehicle for a 78 year old that could do this? Or another way she could do it?

Amount to Halifax is £22500
Current monthly IO payment is £75
Mums income circa £14400 pa
Outgoings circa £10000pa
Savings / ISA of circa £20K
Could put down £3-5K against new payment plan.

Any thoughts?

Thanks in advance,

HappyMJ

I'm pretty sure that mortgage would be out of it's period in which penalties apply if you paid it off.

Me...I'd use the savings/ISA's and just pay it off now.

GoodSon

Thanks MJ,


I'm kinda leaning that way myself, only thing is she goes to Australia about every 12 months for 3 months at a time, so she wants that buffer.


I'm tempted to get her to lay £10K down and reduce her loan amount and therefore monthly payment of £75 - she doesn't actually know this, but I pay £75 into her account each month to cover it anyway.


Was wondering if there was a product that she could pay off the loan amount by a higher monthly payment and I'd make up a proportion of it.


Age may be against her though I guess.

Let_Us_See

Your mother has little spare cash and the ISAs/savings act as an emergency fund in retirement.

Halifax's Retirement Plan is working exactly as it was designed to do and allowed your parents to buy their new home.

Personally, if my mother was 78 I would tell her to maintain quality of life in retirement and not worry about repaying capital simply to "pass more on in the future."

TrickyDicky101

Do you know if you are able to make overpayments on this mortgage balance? That would be one way to achieve what you want. Halifax call centres may not know the answer so don't just take their word for it.

GoodSon

Thanks for the responses. I'll look into the terms of the mortgage and see how best to proceed - if at all.


She had asked me the question is all. She feels obliged to not be seen to leave any debt, probably more to do with my Dad having stated he wished he had gone down another route when they moved.


The point about her keeping her savings is salient and in all honesty, non of us kids (4) have any need for her to leave us anything at all.


More of an exercise for her own peace of mind. There may be a compromise where we make some overpayments.


Thanks again.

Keep_pedalling

Paying it off is not actually going to make much difference in how much she will be able to pass on, and she may need that savings buffer so I would encourage her to leave things as ther are, the time to pay it off would be if she felt she wanted to downsize or required supported living of some kind.

Sounds like she is currently making good use of her money to do the things she wants, don't endanger that by pairing her savings down to the bone.