Helping my mother move away from an interest only mortgage

Ally09

I’m hoping for a bit of advice/push in the right direction as I’d really like to help my 50 year old mother move away from her interest only mortgage.

Issue: she has an interest only mortgage which is getting her no where fast, she still has £86k to pay and her mortgage provider doesn’t seem very reputable, in fact they’ve been sold 2/3 times since she got the mortgage (10yrs ago).

What we need: we need to move her onto a repayments mortgage as she’s never going to be able to clear her mortgage at this rate.

More info: she’s now on esa and pip benefits (£500pcm). My sibling and I pay board which equates to around £500pcm and this brings her incoming total to £1000pcm.

She’d have no issue with repayments as my brother will always support her but, the bank won’t care about this. Also, neither my brother or I want to have a joint mortgage with her as we’d like our own properties soon and we’d want to take advantage of the benefits first time buyers are offered.

The ideal case scenario: for my Mum to get a mortgage on her own but, is this possible based on her income/situation?

We’re waiting to hear back from a few banks as we’ve completed a few mortgage promise applications online however, we’re not hoping our breaths with this.

I’ve also been advised to reach out to brokers for some advice to see if they can help us.

Advice from the mse community would be greatly appreciated.

Thanks

ThePants999

Honestly, this doesn't sound promising to me. How old is she? On an income of £1000pcm, £86K is going to take a long time to repay even if you didn't have to pay any interest, and of course she does. Plus, borrowing £86K on an annual income of £12K probably isn't happening. Talking to a broker can't hurt, I guess...

Worth highlighting that failing to clear the mortgage isn't necessarily disastrous - depending on what LTV that £86K represents, she might be able to get equity release at the point the mortgage comes to an end and needs to be repaid. That obviously comes with its own cons, though...

Ally09

ThePants999 wrote: »

Honestly, this doesn't sound promising to me. How old is she? On an income of £1000pcm, £86K is going to take a long time to repay even if you didn't have to pay any interest, and of course she does. Plus, borrowing £86K on an annual income of £12K probably isn't happening. Talking to a broker can't hurt, I guess...

Worth highlighting that failing to clear the mortgage isn't necessarily disastrous - depending on what LTV that £86K represents, she might be able to get equity release at the point the mortgage comes to an end and needs to be repaid. That obviously comes with its own cons, though...

Thank you for your response, it’s pretty much what I’ve been told already but, there’s no harm in reaching out to get further advice I guess.

In answer to your question;My mother is 50 years old, she’s disabled and no longer able to work. I need to check but, I believe the mortgage is due to come to an end soon

TheBanker

ThePants999 wrote: »

Worth highlighting that failing to clear the mortgage isn't necessarily disastrous - depending on what LTV that £86K represents

OP, do you know the answer to this? What, roughly, is the house worth? (If you don't know, have any similar houses in your street been sold recently? This will give you a very rough idea).

The challenge is that she can't rely on the board paid by you or your brother because if you are moving out soon as you suggest, you will probably need that money for your own mortgages. You may have the best of intentions but as you say lenders won't take this into account.

haras_nosirrah

can she not just overpay her existing mortgage where possible to reduce the outstanding loan - means she isn't committed to a higher payment but will lower the amount of mortgage that has to be paid back when the interest only loan finishes which may make it easier to downsize and move

Ally09

TheBanker wrote: »

OP, do you know the answer to this? What, roughly, is the house worth? (If you don't know, have any similar houses in your street been sold recently? This will give you a very rough idea).

The challenge is that she can't rely on the board paid by you or your brother because if you are moving out soon as you suggest, you will probably need that money for your own mortgages. You may have the best of intentions but as you say lenders won't take this into account.

£90-£100k

My brother would be able to support my mum as his income combined with his partners will allow him to do so - his words not mine. But, you’re right... the bank won’t take this into account

getmore4less

lender & rate?

why not just start overpaying rather than commit to a repayment?

board sounds cheap @ £250pppm

Ally09

haras_nosirrah wrote: »

can she not just overpay her existing mortgage where possible to reduce the outstanding loan - means she isn't committed to a higher payment but will lower the amount of mortgage that has to be paid back when the interest only loan finishes which may make it easier to downsize and move

Possibly but, it wouldn’t be a substantial amount and I wouldn’t be able to guarantee overpayment regularly as she has other expenses to consider. Also, I’ve been told by my uncle that her mortgage is due to come to an end soon. Moving her over to a repayments would be the ideal case scenario.

From your professional experience would you say I’m fighting a losing battle.

Note: I’ve only just taken over my mums finances It was previously managed by her brother.

getmore4less

Before you look at what's next you need to understand the current mortgage.

TrickyDicky101

When does the current mortgage's term end?

Out of that £1000 pm income, what are the bills your mother currently has to pay (ie what does she have left over after the essentials such as Council Tax, food, gas, electricity, water, TV etc have been paid for?

That will help everyone suggest any options.

If you/your brother move out, is there a realistic prospect that a lodger could be moved in in your place?

Might be a good idea to get yourself over to the Debt Free Wannabe's board to see if further savings could be made to pay down the mortgage debt:

http://forums.moneysavingexpert.com/forumdisplay.php?f=76

silvercar

Ally09 wrote: »

Possibly but, it wouldn’t be a substantial amount and I wouldn’t be able to guarantee overpayment regularly as she has other expenses to consider. Also, I’ve been told by my uncle that her mortgage is due to come to an end soon. Moving her over to a repayments would be the ideal case scenario.

This makes no sense to me.

Overpaying by a set amount each month would yield the same result as a repayment mortgage. If you can't guarantee she can afford to overpay each month, then you can't guarantee she would have enough money to meet the monthly repayments on a repayment mortgage.