Parents will

Lizzy01

I'm so worried about my parents situation. They were badly advised many years ago on an endowment mortgage and there isn't enough money to pay off the mortgage. They are in their 70's and only have a couple of years left until they have to hand back their house that they have lived in for 40+ years. Can anyone advise what they can do. They don't have enough equity (only about 50,000) in the house to buy anything else, so they will be homeless. Thank you Lizzy

ACG

How much is the house valued at?

csgohan4

how much is the endowment?

amnblog

There is probably a solution here Lizzy, but their incomes, ages, the mortgage size, the endowment value, and the property value are all key.

AnotherJoe

It's also too easy to blame "bad advice" when almost certainly they've been ignoring red letters for donkeys years, and never took any action to overpay or move to part repayment, despite an endowment mortgage being cheaper than the equivalent repayment mortgage, leaving them an excess they could have used to overpay and gradually rectify the situation.

As said once you publish the relevant facts other options may come into play, or maybe they will need to go into rental,

If they've been there for forty years and only have £50k equity,what have they been doing with the money they haven't been spending on repayments ? It may be they simply couldn't afford this house and should have downsized years back but at least they've had 40 years in it..

Do you have any financial capability to help ?

Lizzy01

It's valued at around £160,000 and they have a mortgage outstanding of £80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.

Keep_pedalling

Lizzy01 wrote: »

It's valued at around £160,000 and they have a mortgage outstanding of £80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.

Presumable the endowment will pay some of that £80k off. Even if the short fall is 50% they are going to have well over £100K of equity so they will have no problem renting somewhere if they can't afford to downsize.

Thrugelmir

Lizzy01 wrote: »

that they have lived in for 40+ years.

Sounds as if there's more to the tale. A house bought that length of time ago for £80k (?) would be worth more than £160k now.

Keep_pedalling

Thrugelmir wrote: »

Sounds as if there's more to the tale. A house bought that length of time ago for £80k (?) would be worth more than £160k now.

Don't think you could get 40 year mortgages back then, so assuming at least one remortgage since then.

kingstreet

Keep_pedalling wrote: »

Don't think you could get 40 year mortgages back then, so assuming at least one remortgage since then.

Halifax was offering the Working Life mortgage with a 45 year term in the early/mid 90s.

AnotherJoe

Lizzy01 wrote: »

It's valued at around £160,000 and they have a mortgage outstanding of £80,000. Which doesn't leave them enough to purchase another property and they obviously wouldn't get another mortgage at their age.

That's £80k equity then, not the £50k you stated, plus they should have an endowment policy maturing in 2 years time if they have an endowment mortgage, which will pay off some of that. Even the worst endowment is probably going to pay half that amount. Which leaves only £40k to pay so that's £120k equity, they could therefore do an equity release scheme pay the £40k have a lump sum as well, and even if interest eats that up over the years that should be enough to stay in the house until they die.

Unless there's some more you haven't said, or your parents haven't told you, and it's your parents who have been reckless rather than suffering from "bad advice" (and merely taking out an endowment say 25+ years ago doesn't count as bad advice). They've had 20 years to plan for this eg since it became apparent endowments would pay out less than most planned for.