Father In Mortgage Arrears

[Deleted User]

I was surprised last year to discover my father had taken out an equity release loan on his property. They'd had an interest only mortgage, and were retired, needed to pay the mortgage amount back. The flat is up some very steep stairs (and my dad has parkinsons, his wife has heart failure so both are infirm) so why they didn't sell the place (it would have increased in price by at least 2/3) and buy somewhere else I'll never know.

But he didn't, he got an equity release loan. So there's probably nothing left by now. This came up after another bout of illness and selling up was mentioned. He's stuck there, unfortunately.

I hope anyone else reads this and doesn't take the decision to have an interest only mortgage and /or use an equity release scheme. Its trapped him.

davidmcn

littlemissrach wrote: »

Just a quick pointer about Power of Attorney, it has to be done when someone understands what they are signing up to and registered through the solicitor.
The big point really is that it only gets 'activated' once someone lacks capacity to make decisions around their finances, you can't just take over their finances through POA before that time.

Yes you can, it depends what type of POA you've made. More info here.

Thealoeverabusiness

Hi Marksoton, I know it is irrelevant how he spent the money, which is why I did not originally state it, but someone asked and I felt obliged to then mention it as you have all been so honest, open and helpful. Thanks

moneyistooshorttomention

Point accepted - that he isn't bad with money. Rather - he has been a bad judge of character (ie picked the wrong business partner). So - that's a mistake that wont get repeated again then.

Deannatrois made a valid point there re concern that he might think the way to deal with this situation is to do an equity release scheme - but that could backfire and trap him in a house that became "unfit for purpose" for his needs as he gets older.

princeofpounds

if you are wealthy enough to have 4 mortgages why dont you just pay the debt off.

That's a bit like asking why someone with multiple credit card debts doesn't go and buy that car they always wanted.


Net worth is very different to the amount of assets you hold.

AnotherJoe

Thealoeverabusiness wrote: »

Hi Marksoton, I know it is irrelevant how he spent the money, which is why I did not originally state it, but someone asked and I felt obliged to then mention it as you have all been so honest, open and helpful. Thanks

Id say It wasnt irrelevant at all, posters here were also concerned that father wouldn't repeat the process if he was just a spendthrift, which it turns out he wasn't but no one was to know that on the basis of the original info provided.

Fair enough ?

bouicca21

There are very few (I suspect no) areas of London where a house would sell for only £450k, so he will probably end up with more than £250k. He would have enough, if his pension will cover the annual costs, for one of those resident warden type schemes.

TBagpuss

Another option might be for you to consider selling or remortgaing your home or one of your BTL properties and buying your FIL's house, or a share of it.

If you were able to buy (say) 50% of the propety that would give your FIL enbough to clear his debts. At that point, you and he would jointly own the poperty mortgage free.
You could move in and share the property (so if you'd sold your own home you would not be left homeless) or you could have an arrangment where he paid rent to you for your share of the property.

You would both need to take independent legal advice to ensure that you were fully aware of any tax / inheritance tax issues, but if you could raisethe funds iot might be an option which would allow him to remain in is home while leaving the flexibility of downsizing at a later date if he needs to.

If you do go down that route it would be sensible to have a formal agreement in place which not only defines the specifc shares in the proeprty that you each have but also sets out how responsibility for maintenance and repairs is shared, how and in what circumstances any of you can require a sale of the proeprty and so on. This will protect all of you in the event that there were a dispute at a later stage but would alos help if you FIL wer to lose capacity as it would ensure that there was a clear record of what his responsibilities and entitlement was, so that his attonrney or deputy would be clear about what it was, and wasn't, appropriate to pay from his assets.

Step one would seem to be to sit down and talk to him. If he is willing to consider moving then downsizing and clearing the debt is proably the simplest option, and if the net equity is n enough to buy somewhere suitable then you could look into whether you could afford to lend him the difference, secured by a charge over his new property. If you wished, this could be a charge for a fixed % of the value of the property payable on his death or on his permamently going into care, to allow him full use of his income, or it could be on a repayment or interest only basis, dpeneding on what you and he prefer.

peld

princeofpounds wrote: »

That's a bit like asking why someone with multiple credit card debts doesn't go and buy that car they always wanted.

thats a spectacularly stupid post.

if some has 4 mortgages they have 4 properties. They can sell 1/2 and get the money. you cant sell a credit card debt.

Guest101

peld wrote: »

thats a spectacularly stupid post.

if some has 4 mortgages they have 4 properties. They can sell 1/2 and get the money. you cant sell a credit card debt.

I think the point was that their 'borrowing power' was used up.