Interest Only Mortgage

BlueKobra

Hi!

I’m looking for advice on behalf of my grandparent who is at the end of their interest only mortgage.

The house is valued at 220k with a 80k mortgage outstanding, my grandparent is aged 75.

Currently their plan is to sell the property and repay the outstanding mortgage and then look for a rented property as they will be unable to afford to buy another house with potentially 130k and be left with 0 money afterwards. (after cc repayments etc - also not looking for flats/apartments).

With this in mind when the money does eventually run out they are hoping they would be able to get support from the council with accommodation.

Has anyone had a similar situation with an elderly family member? I’m also not clued up on how the benefit situation works with support on accommodation.
Does this sound like a good option/road to go down or would you suggest a different option?

Many thanks!

System

Currently their plan is to sell the property and repay the outstanding mortgage and then look for a rented property as they will be unable to afford to buy another house with potentially 130k and be left with 0 money afterwards.

Depends where they are. My 3 bed semi detached house is valued at roughly that, I sold a 2 bed one with a conservatory I'd fully refurbished for £107k. If they were willing to relocate then they absolutely could buy a house outright for that or less.

I’m also not clued up on how the benefit situation works with support on accommodation.

Basically until they get down to their last £6000-£10,000 they'll get no assistance.

AnotherJoe

What about equity release ? Plenty of different types with different costs. Would let them stay in their own house.

luvchocolate

Look at housing associations in their area maybe for over 55s. Rent is cheaper than private and secure.
I put my name down for the one I wanted and got one offered after 2 years.
Maybe look at sheltered housing also

muhandis

Given that he's 75 (and appears to be living by himself?) and has decent equity in the property, releasing a lumpsum through one of the available equity release options for people in the latter years of their life, might be the best option.

One of those options might allow him to release a lump sum and continue to live in his home "rent free" while living off the lump sum and any other income that he has.

The downsides are that there will be very little/nothing to inherit when he passes away, the interest rates are very high compared to mortgages and having cash as opposed to equity in a property might impact any means-tested benefits that he is eligible for.

In any case, you need to take proper professional advice before going down this route.

See here for full details ( https://www.moneysavingexpert.com/mortgages/equity-release/)

BlueKobra wrote: »

Hi!

I’m looking for advice on behalf of my grandparent who is at the end of their interest only mortgage.

The house is valued at 220k with a 80k mortgage outstanding, my grandparent is aged 75.

Currently their plan is to sell the property and repay the outstanding mortgage and then look for a rented property as they will be unable to afford to buy another house with potentially 130k and be left with 0 money afterwards. (after cc repayments etc - also not looking for flats/apartments).

With this in mind when the money does eventually run out they are hoping they would be able to get support from the council with accommodation.

Has anyone had a similar situation with an elderly family member? I’m also not clued up on how the benefit situation works with support on accommodation.
Does this sound like a good option/road to go down or would you suggest a different option?

Many thanks!

Keep_pedalling

What sort of pension income does he have?