Suggestions for 65 yr old with £60k mortgage, £58k assets, pension paid in lump sum

badmemory

Hopefully the necessary repairs will reduce her outgoings & make some overpayments possible.

Is part of her desire to keep the house because she wants to pass it on to you? If so you may have a problem with equity release.

I too would go with C followed by D if necessary but only if she can't get one of the new mortgages. By then the outstanding amount may be small enough to give several options which will avoid equity release.

Iamadored

Arrain19 wrote: »

My mother is 65, single and lives in the north of England. She has mental health issues and is currently unwilling to move from her home, which was our family home prior to my parents' divorce.

My mother has the following major liabilities:
- Outstanding mortgage of £60,000 which is currently interest-only, as she cannot afford to make repayments to the capital; 5 years remaining on the mortgage term.

She does not work (has not worked for 13 years now) and is unlikely to get a job due to mental health issues and alcohol dependence. She receives disability allowance, and has the following assets:
- £8,000 remaining from a workplace pension lump sum she took
- £50,000 inheritance from my grandmother following her death

My mother wants to use the full £58,000 to pay off the majority of the mortgage, however given the house is in such a state of disrepair, I worry that this will leave her with an unsafe and unhygienic property that will only get worse, without her having the funds to maintain the property, and no funds left for her retirement.

I rather agree with your mother. I think she should use the £58k to pay off as much as possible of her mortgage.

If she is an alcoholic, it might be that she doesn't trust herself not to squander the money if it is available. If she uses it to pay off the majority of her mortgage, it will not be available, and she will be unable to squander it.

She has £8k remaining from a workplace pension lump sum. How much was the full lump sum, and what was the rest used for? Did she squander it?

Paying off most of the mortgage will also give her a certain amount of peace of mind; she will at least have a roof over her head (even if it's a leaky one).