Interest only mortgage help

Anonymousneedshelp

Hi, 
My mother in law has recently been widowed and myself and fiancee have been looking into their finances to establish if my mother in law will be OK financially. 
We soon discovered they have been on an interest only mortgage for 20+ years and therefore despite inheritance she does not have enough money to cover the mortgage.  She is 65 years old and around £40,000 short of covering this. I was wondering if anybody had any suggestions on people to contact maybe for compensation of being mis-sold an interest only mortgage. Or alternatively ideas of how we can support the mother in law financially without trying to buy the property. (At 65 she won't be able to get a mortgage of her own)

Many Thanks

[Deleted User]

why do you think she was missold?  Has she been receiving annual statements from the lender? 

in the real world.   If you have disposable income you could do a joint borrower sole proprietor mortgage where you go on a mortgage application to boost affordability

MWT

Anonymousneedshelp said:

I was wondering if anybody had any suggestions on people to contact maybe for compensation of being mis-sold an interest only mortgage.

Merely having an interest only mortgage doesn't qualify as being 'mis-sold'.

She wasn't 65 years old when this mortgage began and even at the worst times of the mortgage selling fiascos it was hard to get into an interest-only mortgage without noticing that it was interest only...

When does the mortgage end?

Are you sure there wasn't a product in place to cover the eventual need to pay off the balance, or is that perhaps where the 'inheritance' has come from?

MWT

Sorry, should also have asked about the current value of the house...

She may have options to down-size for example or consider equity release.

MovingForwards

Equity release / lifetime mortgage.
You / other relatives lend the £40k and secure a private mortgage on the property, acts like a normal mortgage and you agree repayment terms eg on death, moving into care, buying a different property.

What is her pension situation, there are some lenders who lend into retirement.

dunstonh

 I was wondering if anybody had any suggestions on people to contact maybe for compensation of being mis-sold an interest only mortgage.

What makes you think that there is anything wrong with having an interest only mortgage?     The vast majority of people who think that and proceed with complaint find they are either unable to complain (as it was originally bought prior to regulation in 2004) or that it was bought prior to the credit crunch (it was only after that where rules changed on interest only).

The rare cases that do succeed tend to result in no redress where the value of the house has increased.

In this case, you say 20+ years.  So, that makes it earlier than the regulation of mortgages.   It also puts it in the period where repayment vehicles, such as endowment policies, were used.  So,  what happened to the endowment policy?

MWT

Anonymousneedshelp said:

Or alternatively ideas of how we can support the mother in law financially without trying to buy the property. (At 65 she won't be able to get a mortgage of her own)

Just in case you are feeling a little defensive about the posts so far, be assured that you will get plenty of help here but you need to understand that posts like yours are not infrequent, as there are quite a few people that took out interest only mortgages and then failed to deal with their side of the deal by building the necessary wealth to repay the loan.

Inevitably those involved are often over 60 and those posting here often are a lot younger, so begin with the assumption that their trusted and 'elderly' relative must have been mislead about the mortgage.

Keep in mind that many here offering their time and experience are at least as old as the lady in question and are not now, nor were they 20 odd years ago, unable to understand the ramifications of an 'interest only' product, so age itself is neither an excuse nor a cause.

Many caught in this predicament did have perfectly viable plans but failed to achieve them, either by way of planning to use a lump-sum from a pension plan but then left the job that was funding that plan and didn't do anything to make up the short-fall...

... or had an endowment product that was predicted to cover the lump-sum needed but failed to monitor its progress and failed to take any action when it became clear many years ago that the needed total would never be achieved.

So leading with the 'mis-selling' question is a bit of a red flag absent any actual evidence of mis-selling.

We remain happy to help if given a little more information and if you truly believe that mis-selling was involved then please explain why, when it happened and with which lender and you'll get more help on that too if it seems like there is a case to answer...