Interest Only Mortgage Advice

Scott_1701

Hi All, i'm looking for some mortgage advice for my gran, tried searching the forum so apologies if this has been posted before and i've missed it.

My gran is 81, and has an interest-only mortgage, due for completion in 2024 where she will owe £30k.
She has the £30k in cash, and can pay it, however she would ideally like to keep this cash for peace of mind, lifestyle etc etc and after working to the age of 80 supporting vulnerable people in her community, i'd love to be able to help her resolve this.
- I believe she was given bad financial advice years ago, as i would never agree with her going for an interest-only mortgage in the first place, but lets not cry over spilt milk.
- We have considered equity-release, but do not feel this is a viable option given the costs involved.

Do you think a Retirement Interest Only mortgage is a viable option? She would be happy to continue paying the interest, assuming it wouldn't jump up massively. 
If anyone else has any other advice would be much appreciated, thanks in advance.

ACG

Not to be rude, but it is not really to do with whether or not you would agree with it. It is for your gran to decide on how to run her life. I have only done 2-3 interest only mortgages in my life, I am not a big advocate of them but there are times where it works well. 

Equity release mortgages can work like interest only or even repayment mortgages. They are probably easier to get (I am not qualified to advise on them) but because there are no contractual payments, there are no affordability checks. 

It is probably worth speaking to a broker - an equity release one is probably best as they can look at RIO/ER and conventional mortgages. 

Thrugelmir

Settle the mortgage. Little point in incurring unnecessary expense for a relatively small sum. As time passes will simply become a concern for her.  Start paying it back now in fact and reduce the interest charges. 

MWT

Scott_1701 said:

- We have considered equity-release, but do not feel this is a viable option given the costs involved.

I would suggest she speaks to 'Step Change' they are able to help her work through her options including Equity Release, RIO etc.

They are a charity and make no charge for their advice so that should put your cost concerns at ease.

Scott_1701

ACG said:

Not to be rude, but it is not really to do with whether or not you would agree with it. It is for your gran to decide on how to run her life. 

I only said I wouldn't have done that in case anyone chimed in with 'why did she agree to that' type comments, and it is to do with me as my gran has asked me to help her sort it all out. Appreciate the advice though, and i'll perhaps put her in touch with a broker.

Scott_1701

MWT said:

Scott_1701 said:

- We have considered equity-release, but do not feel this is a viable option given the costs involved.

I would suggest she speaks to 'Step Change' they are able to help her work through her options including Equity Release, RIO etc.

They are a charity and make no charge for their advice so that should put your cost concerns at ease.

Thanks for this, didn't know about their advice, i'll certainly have a look into them.

Thrugelmir Thanks for the advice, you certainly make a good point, I'm just not sure settling the mortgage is an avenue she'll want to go down, but certainly one we'll explore, she is quite stressed about having no further emergency savings to fall back on if she settles the mortgage, but perhaps this is a harsh reality she might have to face into.

[Deleted User]

MWT said:

Scott_1701 said:

- We have considered equity-release, but do not feel this is a viable option given the costs involved.

I would suggest she speaks to 'Step Change' they are able to help her work through her options including Equity Release, RIO etc.

They are a charity and make no charge for their advice so that should put your cost concerns at ease.

Step Change is a debt charity meaning they help people find the right debt solution for them i.e. budgeting, DMP, IVA, bankruptcy, etc.  Step Change doesn't go through people's options for mortgages and equity release. 

TrickyDicky101

Step Change will put you in contact with Step Change Financial Solutions (according to Step Change's website) and this is what they state about SCFS:

StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority.

So it's another broking service which ACG has already suggested and not the debt charity itself.

MWT

TrickyDicky101 said:

Step Change will put you in contact with Step Change Financial Solutions (according to Step Change's website) and this is what they state about SCFS:

StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority.

So it's another broking service which ACG has already suggested and not the debt charity itself.

Correct, but the key difference is that they make no charge for their advice.

Once you start reviewing options for the mandatory advice process on equity release you soon bump up against fees in the order of 2-3% of the release or £1-2k flat fees, Step Change Financial Solutions provide the advice for free as they are funded by the Step Change charity.

When you are looking at relatively modest amounts like £30,000 this free advice option makes a lot of sense.

dimbo61

Your 81 year old gran is a vunerable person.
She has debts of £30,000 which the nice benefits people would ignore but she has savings of £30,000 which means she is not entitled to any means tested benefits.
Solution pay off the IO mortgage asap.
She is also paying more in interest on the mortgage than she will be getting from her savings.
Owning your own home in retirement is a wonderful place to live.
If she needs to increase her income she can either sell and rent a retirement property or downsize or do equity release.

TrickyDicky101

MWT said:

TrickyDicky101 said:

Step Change will put you in contact with Step Change Financial Solutions (according to Step Change's website) and this is what they state about SCFS:

StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority.

So it's another broking service which ACG has already suggested and not the debt charity itself.

Correct, but the key difference is that they make no charge for their advice.

Once you start reviewing options for the mandatory advice process on equity release you soon bump up against fees in the order of 2-3% of the release or £1-2k flat fees, Step Change Financial Solutions provide the advice for free as they are funded by the Step Change charity.

When you are looking at relatively modest amounts like £30,000 this free advice option makes a lot of sense.

I think the ultimate source of revenue for SCFS is the lenders (having just reviewed the accounts and those of Step Change itself).  This isn't necessarily bad but there is the possibility - assuming this is the case - that this could influence lender choice [put forward by SCFS].  If considering Equity Release they look like a good option though (as there isn't a profit motive) so I don't want to derail this thread and will cease commenting further.