State pension and converting to repayment

WillyWonga

Hi all, trying to gather some info to see if a plan is worthwhile.

Trying to sort out my 73 year old Dad's mortgage before too late. He owes £25k on additional borrowing on the old mortgage (now paid off). He pays £50 month interest only. He is on £220 week state pension. There was a plan in place to pay it all off but the sudden death of my mum who was the main earner put paid to that.

Nationwide wanted it paid off by 75th birthday. As they have increased age limit possibility of extending till 85 but that's only going to push the problem back not resolve it.

To go repayment over 10 years would be about £240 month. Now here is the big question - converting to repayment would this involve affordability as it's an existing loan??? As long with my brother we will put in £120 month each to pay for it but how will the bank see this. As just on his pension I take it the chances are not good. The house is valued £240k so the £25k mortgage is low on LTV if this helps.

Any thoughts guys?

Goldiegirl

Could he consider selling the house, and move to a smaller property or flat? Then he'd clear the mortgage in full and could have money spare to make his life easier.

Thrugelmir

Any extension to the term will involve affordability checks. Could you and your brother raise the finance to clear the debt? Before the mortgage term expires make over payments on a monthly basis to reduce the debt owed.

molerat

What is the current interest, what would be the new interest rate ? Would overpaying be a practical solution. How much / how often / what would be the minimum overpayments he would be allowed to make ?

missbiggles1

WillyWonga wrote: »

Hi all, trying to gather some info to see if a plan is worthwhile.

Trying to sort out my 73 year old Dad's mortgage before too late. He owes £25k on additional borrowing on the old mortgage (now paid off). He pays £50 month interest only. He is on £220 week state pension. There was a plan in place to pay it all off but the sudden death of my mum who was the main earner put paid to that.

Nationwide wanted it paid off by 75th birthday. As they have increased age limit possibility of extending till 85 but that's only going to push the problem back not resolve it.

To go repayment over 10 years would be about £240 month. Now here is the big question - converting to repayment would this involve affordability as it's an existing loan??? As long with my brother we will put in £120 month each to pay for it but how will the bank see this. As just on his pension I take it the chances are not good. The house is valued £240k so the £25k mortgage is low on LTV if this helps.

Any thoughts guys?

Have you checked whether he's eligible for SMI?

In his situation (which I have been) I'd trade down to something smaller.

WillyWonga

Thanks for the input guys/gals.

Moving isn't on the cards. He suffers from severe anxiety and it would send him on a downward spiral if he was to move.

I thought affordability would be an issue. The other option I am considering is a lifetime mortgage to clear the existing mortgage and for me and my brother to pay off the interest so it doesn't spiral out of control. Unfortunately there is no way me or my brother could raise £25k. He can comfortably live as he is at the moment but not at the rate the repayment mortgage would be hence why we would chip in to pay for it.

WillyWonga

SMI isn't on the cards. After my mum passed they gave him Pension Credit for about a month then raised his pension and took it away from him. The pension takes him just over his personal allowance so I have to complete a self assessment each year and this year has to pay £15 month back...... crazy.