Mum having to sell to meet upcoming end of Interest only

Phteven_2

I'm starting to really worry for my mum. A long time ago she racked up some bad debts and during a mortgage change could only get a sub-prime, interest only mortgage from the dreaded Redstone. Her credit score is good now but here are the problems;

• She's just turned 64 and her interest only mortgage is about to expire in May or June.
• She has no endowment to pay off the capital.

As the property has more value than what is owed on the mortgage, we realised that rather than lose the house to repossession, she's better off selling to pay back the mortgage and she'll have £30- £40k left over if it goes for the moderately expected value, and in time of course.
We've looked at rental options for her. She would like a bungalow ideally as she has disabilities (works full time but receives mobility based PIP) and she's had a fall from the stairs last year. But she would be doubling her current mortgage payment to rent a 2 bed bungalow in Manchester. She would burn through her equity made from the sale of the house in a little over 7 years if she used it to top up to pay the rent.

I imagine she's too old to remortgage at 64?

She does have a mis-selling claim in over the mortgage but this has been going for about 18 months and will probably take just as long to resolve, if not longer, so we can't rely on that for any financial assistance.

She's opened up to the idea of a flat now, so long as it was in an over 55's scheme so she's not got to deal with young people and their noise. But even then the rents can be exorbitant. 

The chap from House Simple is coming round tomorrow to take pics and get the listing active. Any advice we can get for her at in the meantime would be greatly appreciated!

luvchocolate

I cannot offer advice on the mortgage but would suggest she puts her name down on as many housing associations for over 55s maybe with her disabilities she will go up the waiting list. 

Thrugelmir

Phteven_2 said:

She does have a mis-selling claim in over the mortgage but this has been going for about 18 months 

Longer than 18 months ago. Under the direction of the FCA. All lenders were required to write to borrowers with interest only only mortgages asking them how they intended to repay the debt. In instances where no response was received lenders were asked to write again. To avoid issues lenders duely complied. placing the matter fairly and squarely on the borrowers shoulders. Leaving matters to the last minute isn't going to help to force the lenders to do anything. There's no question of misselling unfortunately. 

Phteven_2

Thrugelmir said:

Phteven_2 said:

She does have a mis-selling claim in over the mortgage but this has been going for about 18 months 

Longer than 18 months ago. Under the direction of the FCA. All lenders were required to write to borrowers with interest only only mortgages asking them how they intended to repay the debt. In instances where no response was received lenders were asked to write again. To avoid issues lenders duely complied. placing the matter fairly and squarely on the borrowers shoulders. Leaving matters to the last minute isn't going to help to force the lenders to do anything. There's no question of misselling unfortunately. 

Thank you for that, I wasn't aware. I'll ask her to check the current lender (Red Stone were bought out) on their records for that communication because I don't remember her ever mentioning it. 

sal_III

What does her pension look like? Not familiar with Manchester economics but if in full time employment event at minimum wage with PIP on top, she should be able to afford more than 1/2 of the rent. Burning through the money pot from the house sale in 7 years is a bit short sighted.

Unless there are some exceptional circumstances at play I wouldn't count too much on the "misselling" claim to bear any fruit. Would definitely not stop the bank from demanding the repayment in May/June when it's due.

Thrugelmir

Phteven_2 said:

Thrugelmir said:

Phteven_2 said:

She does have a mis-selling claim in over the mortgage but this has been going for about 18 months 

Longer than 18 months ago. Under the direction of the FCA. All lenders were required to write to borrowers with interest only only mortgages asking them how they intended to repay the debt. In instances where no response was received lenders were asked to write again. To avoid issues lenders duely complied. placing the matter fairly and squarely on the borrowers shoulders. Leaving matters to the last minute isn't going to help to force the lenders to do anything. There's no question of misselling unfortunately. 

Thank you for that, I wasn't aware. I'll ask her to check the current lender (Red Stone were bought out) on their records for that communication because I don't remember her ever mentioning it. 

Open a dialogue with the lender as soon as possible. Better the situation is managed. Than incur considerable additional costs. 

ACG

I do not thing the figures will stack up, but could she look at equity release? If she were to buy somewhere for say £90,000 and put down say £35,000 that would mean she has equity release for £55,000 and although the equity will get eaten up, she will also not be paying rent in the meantime. But living in Manchester myself I am not sure there are many places you can get a bungalow for £90k. 

It could be worth her speaking to a broker either for equity release or a conventional mortgages depending on what her pension income is, some lenders will lend based on retirement income.