Interest only mortgage?

Georgiah406

Hi all, my grandmother currently has an interest only mortgage with about £70k outstanding and this expires in 2 years. She is 63 at the moment and would struggle to afford a repayment mortgage in the unlikely event she could even get one! The likelihood is that selling her home would just about clear this debt however this would leave her no where to go! As far as I was aware she cannot apply for council housing whilst she has a mortgage and on her wages/small pension she could not afford to rent privately. The house she owns right now is going to become a problem in the not so distant future due to her arthritis/knee problems as there are many steep steps up to the house. There is no equity in the house and because of her health deteriorating it would not be beneficial to take out a lifetime mortgage. I have now completely run out of ideas on what to suggest so any advice would be helpful! Thanks.

elmer

Sheltered housing via the council? It doesn't always matter if you have a mortgage when you apply if you intend to sell the house, especially if she has health issues.

elmer

ViolaLass

Have you approached the council to check whether what you think is right?

Prothet_of_Doom

Could she move in with you ?

Georgiah406

Hi guys, thanks for the replies! I shall look into the sheltered housing but does anyone know if Halifax have a policy for expired interest only mortgages as I imagine there is quite a wait for houses? I work for a bank where there is currently no policy so mortgages just run on until redeemed. In terms of her moving in with me, I'm currently saving for a mortgage of my own and still living with parents, there wouldn't be room in our house currently.

Dird

Georgiah406 wrote: »

I'm currently saving for a mortgage of my own and still living with parents, there wouldn't be room in our house currently.

Assuming the council don't come through, you couldn't sleep on the sofa?

Georgiah406

Well ideally that wouldn't be the best long term solution. Also, if your living with close relatives the council are even less likely to offer housing

konark

Surely interest-only mortgages were only sold in conjunction with endowment policies that matured to pay off the capital? When I took one out I was told the mortgage was dependent on taking out the endowment. And so it should be, who wants a large capital repayment to find at the end of 25 years? Didn't your gran take out a policy?

You also say the value of the house is equal to the outstanding mortgage, I can't understand this as virtually every house in the country is worth at least double what it was 20/25 years ago.

The only way this could happen is if your lender gave a 100% repayment-only mortgage without endowment and then increased the loan later on. Responsible lending? they've been generous so far why not just ask them for an extension or another loan?

luvchocolate

Hi put her name down with all the housing associations in the area for over 55s...usually housed within 2 years often quicker if she has health problems, much quicker than the council.

getmore4less

Georgiah406 wrote: »

interest only mortgage with about £70k outstanding and this expires in 2 years. She is 63 at the moment and would struggle to afford a repayment mortgage in the unlikely event she could even get one! The likelihood is that selling her home would just about clear this debt

This is quite unusual, when/what was the last change to the mortgage.

The house she owns right now is going to become a problem in the not so distant future due to her arthritis/knee problems as there are many steep steps up to the house.

Exit plan is the only option.
review the debt and house selling options and the rehousing options with a view to moving, 2 years(longer if the lender cooperates) should be sufficient to formulate a plan and move on.

robotrobo

konark wrote: »

Surely interest-only mortgages were only sold in conjunction with endowment policies that matured to pay off the capital? When I took one out I was told the mortgage was dependent on taking out the endowment. And so it should be, who wants a large capital repayment to find at the end of 25 years? Didn't your gran take out a policy?

You also say the value of the house is equal to the outstanding mortgage, I can't understand this as virtually every house in the country is worth at least double what it was 20/25 years ago.

The only way this could happen is if your lender gave a 100% repayment-only mortgage without endowment and then increased the loan later on. Responsible lending? they've been generous so far why not just ask them for an extension or another loan?

quite right!. you didnt get a mortgage unless you had a life endowment running alongside the debt, in my case ok, i had 4k to put to on the shortfall . Something does not sound right with this,