Advice on parents mortgage

munchkinz

Hi, I’m not even sure what I’m asking.
my parents bought their house and have £25,000 and 7.5 years left on the mortgage. They divorced around 10 years ago, my dad stayed in the house and my mum moved out but was never taken off the mortgage (I didn’t know this until recently)
anyway, my dad lost his job 18 months ago and can’t afford the mortgage anymore so I have been paying it each month for him. My mum pays nothing. 

With him being unemployed he can’t get a new mortgage, my mum is also unemployed due to ill health. It will cost £125 to take her off the mortgage, but they want to do an affordability check, which neither of them will pass.
The current mortgage is 2.75%.

is there anything we can do in this situation to reduce the monthly costs? I don’t mind paying it for him, it was my family home and I’d hate to lose it.

xylophone

Do you live with your father? Or do you already own a property of your own?
How old is your father?

munchkinz

xylophone said:

Do you live with your father? Or do you already own a property of your own?
How old is your father?

Hi, I don’t live with him, he lives alone. He is 62.
I’m 35, I own my own home with my husband (53) with no mortgage, we are both self employed (husband semi retired). 1 child (6).

dimbo61

With a £25,000 mortgage how long is left on the mortgage ?
What does the mortgage cost each month ?
Can you afford to pay it each month and keep your dad in the family home ?
Cheaper than him renting !
Will you inherit the house.
Do you have sisters and brothers.

MovingForwards

dimbo61 said:

With a £25,000 mortgage how long is left on the mortgage ?
What does the mortgage cost each month ?
Can you afford to pay it each month and keep your dad in the family home ?
Cheaper than him renting !
Will you inherit the house.
Do you have sisters and brothers.

Has he severed the joint tenancy at the land registry?

Has he made a will? 

What's the value of the property?

Is your dad claiming all the benefits he should be?

munchkinz

dimbo61 said:

With a £25,000 mortgage how long is left on the mortgage ?
What does the mortgage cost each month ?
Can you afford to pay it each month and keep your dad in the family home ?
Cheaper than him renting !
Will you inherit the house.
Do you have sisters and brothers.

7 years 5 months left on the mortgage. Monthly cost is £324
Yes, I can afford to pay it and I will inherit the house. No brothers or sisters.

MovingForwards said:

dimbo61 said:

With a £25,000 mortgage how long is left on the mortgage ?
What does the mortgage cost each month ?
Can you afford to pay it each month and keep your dad in the family home ?
Cheaper than him renting !
Will you inherit the house.
Do you have sisters and brothers.

Has he severed the joint tenancy at the land registry?

Has he made a will? 

What's the value of the property?

Is your dad claiming all the benefits he should be?

Not aware that he has severed the joint tenancy. No Will (it's on the list to make him do!) value I'd guess around £90,000.
Only benefits entitled to are Universal credit of £73ish a week and council tax benefit. Currently trying to get him to claim PIP.

munchkinz

I wondered if it might be worth, taking mum off and adding me to the mortgage to pass the affordability checks. Then it should be possible to get a better deal, I could also potentially pay off a lump sum. 
Mum wants nothing to do with the house. 

MovingForwards

In theory your dad is, or will be, entitled to help with payment toward the interest on the mortgage, downside to that is it's a loan nowadays and has to be paid back.

Have a look on the official land registry website, obtain a copy of the title deeds (£3) and see what the restriction says, type it up and we can confirm whether he has severed it.

If the restriction is your parents own it jointly, if your dad passed away it automatically transfers to your mom and there is nothing of the property for you.

If the restriction isnt there, then unless you dad has paperwork to say otherwise, they own 50% each and are free to leave their share to who they want.

A will should be less than £200 for a solicitor to prepare, witness and store until needed (they don't usually charge a storage fee, it's part of the service).

You/your dad should look into a power of attorney, especially due to his health, means you can step in and help with finances.

With your dad having no income at the moment, probably would be different if he had PIP, he may not qualify for a mortgage.

However, you say you have no mortgage, is that because it's paid off? Or are you in rental? (I'm assuming own home, or in your husband's name).

Potentially, if you do own your home, you could raise a small mortgage on that, to enable you to clear your dad's. Have something like a 20 year mortgage, but overpay it. This would bring the costs right down for you and possibly have it suit your income better.

Whilst there would potentially be the option of a buy to let mortgage, or similar, the difficulty is the property would have previously been in your dad's name AND he would still be living in it, I think this restricts the pool of potential lenders.

BUT, I would strongly urge you to get a legal document drawn up, between your mom and dad, declaring she wants nothing from the house; it's amazing how many people change their mind when money appears.

@kingstreet @haras_n0sirrah @ACG    do any of you have any suggestions?

[Deleted User]

How about:

A Joint Borrower Sole Owner mortgage.   This keeps the property in your dads name but increases affordability to allow Mum to come off the mortgage and the title.  Someone like Barclays has no upper age limit for an applicant whos income isnt being used for the affordability assesment so you could do a longer term to reduce your payments if the long term intention is to keep paying his mortgage.   It will also keep you off his property title and as such doesnt bring rise to a Stamp Duty charge.

You could do a straightforward Joint Mortgage with someone like Natwest who are fine if the 2nd applicant doesnt live in the property.  Downside is that you will generally get an upper age limit so reducing the mortgage payments might not be possible

Otherwise capital raising against your own to clear his mortgage completely is a good option as well.  Achieves the same goal and would be cheaper overall as less legal work involved. 

[Deleted User]

What about a Nationwide later life mortgage for him ? Can be no payments ( interests rolls up - not recommended but maybe all he passes for ) interest only or interest and repayments. 

I like the idea of PP above though of you raising the mortgage on your house, paying dads mortgage off ( and house transferred into dads sole name ?) .... you could put a secured charge on his house for the money you gave to pay off the mortgage so you will always get that money back in case house needs to be sold as needed to pay care fees etc. 

onwards&upwards

If dad lives alone what about selling up and downsizing?