Parents mortgage problems following redundancy - suggestions?!

Thrugelmir

MovingForwards wrote: »

How much is the mortgage payment per month as surely it can't be a large amount if it's £20k outstanding.

With a monthly income of only £1400 sufficiently large to make life financially uncomfortable. There's only 3 years to run on the mortgage by the sounds of it.

ACG

Equity Release - some will allow overpayments which will work in a similar way to a conventional mortgage (although there may be charges).
Equity Release - some will allow you to "reserve" a portion of the property, so as an example you may be able to say we want a guarantee that the mortgage will not go above 90% of the property value, which in turn means they are able to pass something on to you.
Help from you/other family.
Selling some items in order to make lump sum over payments and bring the repayments down.
Are there spare rooms/land? Could they rent some of it out? Camping/AirBnB etc?

[Deleted User]

Going a bit backwards here but how about you have a mortgage with you and your parents?

Joint Borrower Sole Proprietor mortgages exist usually for parents to help children with affordability but no reason they couldn't be used the other way round.

You would be liable for the mortgage debt but if you have surplus income it could be used to boost affordability. There a few lenders that do this and they would be reasonable about taking your parents to an older age as they are already retired and income is guaranteed.

So you (in theory) could arrange a mortgage over a longer term to keep the payments down but still work away at the debt. You wouldnt have to contribute to the mortgage (but you would be liable on paper) so your parents might be happier with that element of independence. Taking it over 10 years isnt ideal but might be better than equity release or something

Independent legal advice is always recommended and sometimes insisted on as you take on a lot of the responsibility but dont get any of the benefits

JGB1955

Would they be able to take in a lodger?

PasturesNew

It doesn't sound like they need much to tip the balance in their favour.

Could they consider any of the following?
- a Monday-Friday lodger. AirBNB/similar?*
- renting out parking/driveway space?


* I'm currently looking for somewhere to live and the website spareroom has all sorts of people with all sorts of rooms - and they can set criteria about situation/sex/age etc.

Short-term pain to get the mortgage nailed once and for all.

Retired_Mortgage_Adviser

I don't mean to dismiss the situation your parents are in but with more than 94% equity in a property worth 350k and a net income of £1,400 monthly, I daresay this is a surmountable obstacle, though long-term they will probably need to consider avenues of releasing home-equity to top up their current income.

£20k outstanding over 3 years even at an SVR of 5% comes to a monthly payment of about £600.

From what I can see the options are -

1. You contribute to the monthly mortgage payments.
2. Some form of equity release with a reserve, which could also help with your parents' living costs to supplement the £1,400/month.
3. Take a lodger or rent out a room in some other form (short-lets, etc).

Good luck to you and your parents, hope it all works out well!

1983JK wrote: »

The property is probably worth in the region of £350k. Downsizing could be a possibility but they've given their blood sweat and tears to renovate the house, leaving it would need to be an absolute last resort. My dad would need to be forcibly removed against his will, it's everything to him.

They are currently receiving state pension, nothing was deferred. Combined they get approx £1400/month.

Mortgage_Adviser

Thrugelmir wrote: »

Equity release isn't going to solve the problem longer term. Debt is debt.

Why are you saying this? It would in fact solve the problem fully, through the lifetime mortgage.
Yes, this is not OP's preference, but it is a solution.
There are also equiry release products allowing to service the mortgage monthly so the debt doesn't growns further meaning the bank doesn't eats in to the ownership.

TBagpuss

OP - there are a few options:

1. Your parents downsize and move into a smaller property. This would allow them to clear the mortgage, and would robably also give them some capital to add to their income.

2. You borrow some money which you lend to them to reduce the mortgage. Assuming that they have no current ERCs on their mortgage, you could lenf them a lump sum (maybe £10,000) which they could pay off the mortgage, which would then leave them with £10K outstanding - depending on their interest rate, this could bring the monthly repayments down to £300 or less - wouldthat be affordable on their income? (they could then, once the mortgage is clear, reya you for the loan you gave them, at a similar rate, or alternatively you could lend the money on the basis that you have a charge over the house repayable when they sell.) Even if you were only able to lend them £5,000, that could reduce their monthly payment from round £600 to around £450. have they done a budget to see what their other outgoings are, and how much they can realistically afford?
Do you have any siblings who might also be able to help? (either with a lump sum or with a small monthly contribution.

3. Could they increase thei income to cover the mortgage payments? Renting out the driveway (if they are near a station or in an area with limited parking) or getting a lodger or two (assuming that they would be comfortable with having extra people in the house.

You mention that your dad is looking for work, but it sounds as though he is looking for jobs in his ownfield - it may be worth his while to widen his search, at least short term - even iof he did some part time work for a supermarket or other low-skilled job, that would give them a bit of an income boost, and he can still kep applying for jobs more suited to his qualifications.
How old is yor mum, and could she work at all?

Even if they each worked for 3 or 4 hours, 2 days a week, they could bring in over £400 a month between them whoch would probably make the mortgage affordbale with that and their pensions. A lot of younger people ned to owrk around children's school times so if they were willing to work from (say) 3 - 5 they might find that they could be a good fit with a part-time parent working for a smaller employer. Equally, smaller businesses such as cafe's where there are short, bsy periods might be interested in someone who is only looking for a few hours at a time and who can be flexible.

4. Are there any things which they could sell? Even if this just brings in enough to vcover the mortgage paymetnsd for a couple of months while they re-group and decide what to do next.

5. Have they spoken to their lender about the possibility of extending the mortgage term? This may be tricky given their ages and invomes, but on the other hand, there is a lot of equity. Extending the mortgage by another couple of years would reduce the monthly payments and muight make it more affordable.

6. Equity Release. This is the simplest option - some products allow you to make paymetns of interest and while it is an expensive way to borrow, it wuld allow them to remain in their home and would simply rduce their estate when they die. They would also have the option of borroing more than £20,000 to allow them to clear the mortgage and have an emergency fund, if they wanted.

7. Fianly, they could approach their lender to ask for a short payment holiday - this is not a long term solution but might giv them a breathing space of a month or two while they decide what to do, without them going into arrears.

Thrugelmir

Mortgage_Adviser wrote: »

Why are you saying this? It would in fact solve the problem fully, through the lifetime mortgage.

Given the low level of net monthly income they have. Which may diminish further once one of them dies. The debt will require still servicing. While interest rates are currently low with no sign of an increase on the horizon. Being complacent about them remaining low indefinately carries risk.