Advice for elderly parents.

Ribbons473

I am looking for some advice for my parents.

They are 77 & 72 they have lived in the same house for 40 years, the house is currently worth £700,000 approx.

They have an £80,000 interest only mortgage still outstanding.

My Mum is adamant she thought they were taking a repayment product but turns out not so they are stuck with this.

My Mum still works mainly to pay this mortgage so my brother and I are trying to work out what the best way forward is for them.

My Dad is fairly certain that he can't/won't move to release the equity in the house have briefly looked at equity release but very unsure...ultimately they need to free up some cash but do they realistically have any options if they choose to stay in the house.

Any advice gratefully received.

Thanks

foxy-stoat

Can you and your brother release equity from your own properties to pay this off....it will all be yours at some point anyway?

How long until the mortgage terms ends?

amnblog

Why unsure about equity release?

AnotherJoe

On the assumption that this house will eventually be yours it would be far cheaper for you and your brother to pay off the mortgage than an ER company. By a very very long way.
If you do do it, make sure it's done as a loan to them, documented, with a charge on the house, so that should eventually the house need to be sold to pay for care, in a real "worse case situation" your £80k is ring fenced.
If your parents are very keen to ensure you and your brother get the house or it's equivalent value as an inheritance then either this or them downsizing are the two best ways to do it. ER over 20 years could easily remove a third to a half of the houses value. It also can cause serious problems should they wish to downsize later on.

Nebulous2

Watch out for the end date of the interest only product - the lender will expect their money back, so it will need to be refinanced.



None of the options sound very palatable - your mother can't continue working forever, your father doesn't want to move, the interest only mortgage will have to be repaid. Something is going to have to give.

AnotherJoe

Nebulous2 wrote: »

Watch out for the end date of the interest only product - the lender will expect their money back, so it will need to be refinanced.

None of the options sound very palatable - your mother can't continue working forever, your father doesn't want to move, the interest only mortgage will have to be repaid. Something is going to have to give.

I agree. Might be worth pointing out to dad that if they wish to move to perhaps more fitted accommodation for elderly people in say ten years time, a ER mortgage against the house will make that much more difficult to do both technically and also simply because they will have much less money to spend on one. In ten years they'd lose maybe £100k.

Keep_pedalling

Personally I would do every thing I could to talk them into downsizing. I have seen too many people’s emotional attachment to a house ruin what could have been a very comfortable secure way to enjoy the latter part of their lives. I have a near neighbour sitting on a £800k asset that he can hardly afford to heat, and the windows about to fall out of their rotten frames.

I think your mother is the key here, it is all very well for your father to say he won’t move, but she is the one most affected. If you can convince her that downsizing will make her her life so much better, then she will hopefully be able to convince your father.

somethingcorporate

Yep, downsizing, whilst somewhat unpalatable could be the best option given there is so much value in the house.


It could allow them to live very comfortably turning a large current liability into a better/smaller/more appropriate house and a pile of cash producing an income.