Payment holiday due to illness?

FIRE_aspire

Hi - posting on behalf of a family member. One of my close family has recently been diagnosed with Stage IV cancer, primary cancer in the bile duct/gall bladder which has then spread. He has been told the primary cancer is incurable but has been offered chemotherapy for the secondary cancer (about 6 - 8 weeks). He has not had a prognosis, so doesn't know at the moment how long he will have to live.

He is 62 and in full time employment - his wife is retired with state pension only, and also has health issues (mobility). He will only receive SSP from work, and he and his wife are in the process of applying to DWP for a PIP. They have no critical illness cover (he has life cover) and were wondering whether to apply to the mortgage company for a payment holiday (they've had the mortgage for about 5 years, never missed a payment or taken a payment holiday). They have about £50k equity in their property, with a payment of £700 a month. They are looking out the paperwork so I can check the terms for them, but in the meantime thought I'd ask for views on here.

I'm not sure whether it's a good idea to alert the mortgage company to their situation, but they will soon be struggling to pay the mortgage. They also need to have additional help around the house due to both of their health issues, and do not have family nearby to help out.
 
Any advice would be very helpful. Thank you.

FashionHeart

FIRE_aspire said:

Hi - posting on behalf of a family member. One of my close family has recently been diagnosed with Stage IV cancer, primary cancer in the bile duct/gall bladder which has then spread. He has been told the primary cancer is incurable but has been offered chemotherapy for the secondary cancer (about 6 - 8 weeks). He has not had a prognosis, so doesn't know at the moment how long he will have to live.

He is 62 and in full time employment - his wife is retired with state pension only, and also has health issues (mobility). He will only receive SSP from work, and he and his wife are in the process of applying to DWP for a PIP. They have no critical illness cover (he has life cover) and were wondering whether to apply to the mortgage company for a payment holiday (they've had the mortgage for about 5 years, never missed a payment or taken a payment holiday). They have about £50k equity in their property, with a payment of £700 a month. They are looking out the paperwork so I can check the terms for them, but in the meantime thought I'd ask for views on here.

I'm not sure whether it's a good idea to alert the mortgage company to their situation, but they will soon be struggling to pay the mortgage. They also need to have additional help around the house due to both of their health issues, and do not have family nearby to help out.
 
Any advice would be very helpful. Thank you.

It might be too late to apply for payment holidays as some banks no longer offer them as lockdown restrictions are easing.
However I'd recommend your friends to contact their banks and tell them the whole situation.
They are not alone as everyone are still struggling to make ends meet during this difficult time.

Thrugelmir

FIRE_aspire said:

I'm not sure whether it's a good idea to alert the mortgage company to their situation, but they will soon be struggling to pay the mortgage. 

By not informing the mortgage company will only add additional stress to the situation. What's the longer term plan. As a payment holiday in itself doesn't appear to solve anything. 

comeandgo

Could he ask to go on an interest only payment?  This is something we did though it was many years ago and had a lot of equity, more than 60% and you mention only 50k as equity.

FIRE_aspire

Thrugelmir - hopefully the PIP payment will be approved soon. And the suggestion by comeandgo is a good one.

As to the longer term plan - if he recovers enough to go back to work, the mortgage can be paid. If the very worst happens, there is life cover which will pay the mortgage off.

Thanks both.

MWT

Not enough information about either his prognosis, his resources (pension funds, life insurance etc.) or the mortgage (current house value, amount outstanding).

Odds are they are going to need some professional financial advice to make the most of the assets available to provide for the future, but a lot depends on the prognosis and I'm a little surprised that there isn't more information there if the primary cancer has already been determined to be stage IV and inoperable...

FIRE_aspire

MWT said:

Not enough information about either his prognosis, his resources (pension funds, life insurance etc.) or the mortgage (current house value, amount outstanding).

Odds are they are going to need some professional financial advice to make the most of the assets available to provide for the future, but a lot depends on the prognosis and I'm a little surprised that there isn't more information there if the primary cancer has already been determined to be stage IV and inoperable...

The health team will not commit to a prognosis as they say it's too early. I'm not sure this is acceptable, given he needs to make decisions about lots of things, including his treatment, and am trying to find out answers from more knowledgeable people than myself.
Pension - I think just state pension but will check.
Life insurance will be enough to pay the outstanding mortgage and a few thousand left over.
Current house value is approx £108k, with about £60k outstanding.

As you rightly say, a lot depends on the prognosis and I feel they are operating in the dark. I'm trying to help as much as I can, but it's reassuring to know that you also are surprised there's not more information given what he has been told.

MWT

I do understand that his team don't want to say 18-24 months and then find the secondary cancers do not respond or are more widespread and hence they have to reduce the estimate, but it feels like the primary should set the longest expectation as there is no treatment plan.

However, if he does not have any resources beyond state pension or life insurance there isn't a lot of creative financial planning open to him unfortunately.

Do check the life insurance to make sure it is not somehow tied to his employment, and assuming it isn't, if money is going to get tight, making those insurance payments becomes the top priority each month.

Also a good time to ask him about his career history just in case there many be some pensions contributions out there that he might have forgotten about...

FIRE_aspire

MWT said:

I do understand that his team don't want to say 18-24 months and then find the secondary cancers do not respond or are more widespread and hence they have to reduce the estimate, but it feels like the primary should set the longest expectation as there is no treatment plan.

However, if he does not have any resources beyond state pension or life insurance there isn't a lot of creative financial planning open to him unfortunately.

Do check the life insurance to make sure it is not somehow tied to his employment, and assuming it isn't, if money is going to get tight, making those insurance payments becomes the top priority each month.

Also a good time to ask him about his career history just in case there many be some pensions contributions out there that he might have forgotten about...

Great advice - many thanks.