Interest only Mortgage - Urgent help needed...

MoXoM

Hi,

I'll try to keep this short as possible.

My mum received a letter from Bank of Ireland regarding her Interest Only Mortgage.

She and my step-dad took it out in 1991 but he left her around 15 years ago (they are still married).

She was paying it until a few years ago when she became ill so I moved back home and took over the mortgage repayments and Council Tax. The mortgage repayment is approx £230 per month and is still in my mums and dads name.

Anyway, the letter states that the final payment of £59,621.15 is due on 31st January 2017 (approx 2 weeks from now).

When contacting Bank of Ireland to talk about paying it off she was horrified to discover that there was no Endownment to put towards the money owed.

She seemed convinced that their was one but Bank of Ireland said there wasn't (my step-dad possibly cancelled it or maybe there wasn't one in the first place - her memory isn't very good).

Unfortunately my step dad took a lot of paperwork with him so we have no proof of anything. There has been no contact since he left 15 years ago.

I offered to make regular payments of £500 for the next 10 years but they said no. I've been given 2 weeks to contact them with how I plan on paying the money to them.

I asked about turning the amount due into a Repayment Mortgage but they said as the mortgage is in my mums name and she has no income, she would likely fail the credit check.

I'm not sure what to do.

I feel frustrated because I know I can pay the £60,000 in 10 or 15 years. Thankfully I have no debt and my personal credit rating is excellent.

One option would be to take out a £60,000 loan over 10 or 15 years which I would be happy to do. However, doing a quick search online reveals that most lenders only offer loans up to £20,000 and even then there are restrictions to what the loan can be used for.

I wondered if it were possible for my mum to sell the property to me for £60,000 (she is happy to do so). I'd be happy to take out a Mortgage for 15 or 20 years if needed and I would be a First Time buyer. She could then use that money to pay back Bank of Ireland.

Would that option be allowed?

I'd really appreciate any guidance you can offer.

Thanks in advance for your help.

Kind regards,

Mo.

lr1277

Some thoughts:

1) Is your step dad named on the deeds as one of the owners? If so, he would have to sign off on any sale. In which case he may want some of the sale proceeds.
2) What is the market value of the house? Is it more than £60k? Whilst the house can be sold to whoever for whatever amount, this may become a problem if your mum (or your step-dad if he is on the deeds) need council funded care. It the house is sold for less than market value, I understand that may be deprivation of assets. I have very little knowledge of this, so hopefully somebody with more knowledge can advise.

armchaireconomist

If your step dad is still on the deeds, you will need him around to make the purchase. If the house is worth say 200K and you want him to sell his share of that house for effectively £0 out of goodwill to your mother however, is another matter entirely...


If you do manage to buy it then your mother can bay BoI outstanding balance. In two weeks however is a tall order. Good luck.

amnblog

Hi Mo


You have left it a little late to deal with this but there we are.


You have not stated the value of the property nor Mum's age. Depending on these factors she may be able to replace her mortgage with a specialist mortgage for older homeowners where her income is not a factor.


You can buy the property from Mum but as she will continue to live in the property there are few mortgage lenders that will accept this.


If the property is not now solely in Mum's name, that is a further complication.


Contact an experienced mortgage broker today and you may have some positive feedback before the weekend.

silvercar

The Family Building Society do a product that allows for you to stay in your home for a few more years - that may give you time to sort things out.

https://familybuildingsociety.co.uk/Mortgages/Later_Life_Lending.aspx

Remember that the 2 weeks is actually a bit longer. If the lender won't extend the mortgage for a year or two to give you a breathing space, they would actually need a court order to repossess. SO you do have months rather than weeks, but costs will attach to a delay.

MoXoM

Thanks for the responses.

Just to clarify a few things:

1) My Step-dads name is on the Mortgage - I've been advised to contact a Solicitor with my mum to see if there is a way to have his name removed from Mortgage as we have no contact from him for past 15 years or so and hasn't made any contributions towards Mortgage during that time.

2) My mum is 55 years old and she will continue to live in the house if I were to get a Mortgage.

3) I've not had a Valuation done yet but property is believed to be in the 250k mark.

I'd still prefer to get a large loan rather than a Mortgage if possible.

I bank with Barclays and have been with them for 18+ years.
On the Barclays App on my mobile I've been pre-selected to apply for a £25,000 loan over 60 months.

I plan on visiting my local Barclays Bank to see if there is a way to apply for a larger loan to be repaid over a longer period.

If that option is not available then I would need to apply for a Mortgage instead.

I think the main priority at the moment is to take my step-dads name off the Mortgage before I can proceed any further.

Thanks again for all your help. Anymore input would be greatly appreciated.

Regards,

Mo.

Thrugelmir

Is downsizing an alternative option. As there's a reasonable amount of equity in the property. This would then provide security for your mother for the remainder of her life.

Will your mother never work again?

Mr.Generous

why get a personal (unsecured) loan at say 6.5% rather than a mortgage secured against the property at say 3.8% ?

Your loan to value ratio based on the valuation will give you good rates, just the deposit to sort.

MoXoM

Hi Thrugelmir,

The property is our family home so we really don't want to leave.

If there is a chance that I can keep the house then that is what I plan on doing.

My mum may work again on a part time basis in the future but to be honest I'd rather she just focused on getting better and not worry about having to work unles she decides she wants to.

I have a sister who lives nearby who recently had a child and so my mum will be busy helping to look after her granddaughter.

We also have three cats so that would be another thing to worry about....

Regards,

Mo.

AnotherJoe

First thing is get father off the mortgage.
Non trivial and expensive especially if he cant be found.
Especially if he wants some of the equity.

Wh05apk

It may be possible for you to replace your dad on the mortgage, however as you will then be taking over ownership of the property, you will have a stamp duty liability, however this may work out the best option, if your income is sufficient, and your dad is happy to be replaced.


Don't even think about a personal loan, when you could get a mortgage at under 2%.