Interest only Mortgage

silvercar

Sobering thought that there are parts of the country where property is worth less than it did 10 years ago.

That aside, you need to post the outstanding mortgage and the value of the property.

amnblog

They had the cash to buy outright.

Took a 'small mortgage of £40K' and now there is no equity?

We are missing a chunk of this story.

jackieblack

amnblog wrote: »

They had the cash to buy outright.

Took a 'small mortgage of £40K' and now there is no equity?

We are missing a chunk of this story.

Which is why 3 of us have now asked how much the house is worth now.
Something doesn't add up

Thrugelmir

amnblog wrote: »

They had the cash to buy outright.

Took a 'small mortgage of £40K' and now there is no equity?

We are missing a chunk of this story.

In part falls under the category of people accepting responsibility for their own actions and choices. In life there's often no going back if the wrong one is taken. Blaming somebody else seems to be part of British culture these days.

regprentice

Bought my 3 bed house for £82k 15 years ago and now struggling to sell at £110k. Suspect they are selling around £100. I live in an ex council semi a commutable distance to edinburgh so not in middle of nowhere.

Op's parents position could be similar.

They had 100k.They bought a 100k house for 60k cash and a 40k interest only mortgage. They spent the other 40k...no point labouring over why.

Both are now to old to remortgage and appear to have no funds to clear the 40k io mortgage. The house could have 40k or more of equity... Or like mine it might have 20k or it may even be in negative . Not everyone lives in london.

Why is this an issue now. Mortgage expiring soon? Perhaps theyve had a letter asking how they intend to repay at the end of the term? Trying to sort out their inheritance planning? Kids just realised mess parents are in?

Cant see why this would have been misselling. What reason is there to believe that the parents didnt clearly understand what they were doing?

At this point the parents need to understand their remaining term and how they intend to find the 40k capital. If they cant they need to start researching downsizing possibilities where they are.

Edit. - just reread op...not sure many of us have read it properly

I think the only issue is what did they think the equity release at the end represented. The way its written it doesnt make sense ? A further remortgage at 74?

AnotherJoe

amnblog wrote: »

They had the cash to buy outright.
Took a 'small mortgage of £40K' and now there is no equity?
We are missing a chunk of this story.

The story is all there, its just the way the OP explained.

I think the story is, there is some equity left, but its not enough to qualify for an equity release scheme which was the plan to pay off the £40k IO mortgage.

The plan.
1. Borrow £40k IO for fixed term ?10 years?
2. At end, use equity release scheme to pay off.
3. Live in house until they die, then equity release get whatever they are due and anything left goes to relatives.
4. Plan no longer workable due to fall in house prices, they are not eligible for ER.

I dont know what the rules are but I think the OP said they were advised there needed to be at least 2x the equity left to do an equity release?