Interest only mortgage whilst mentally ill

[Deleted User]

Hello. I’m looking for advice as I’m not sure where to start. My stepdad is severely mentally I’ll and has a home that he remortgaged 13 years ago and was advised to switch to an interest only mortgage. He receives maximum disability benefits and has a sizeable fire fighter pension. I am unsure why he went to an interest only mortgage as my mum and him, at that time, were not on speaking terms as he was in a manic phase of his illness. It has just come to light that he on has 7 years left of his interest only mortgage to pay and cannot afford the last payment (approx £75,000). He is becoming very unwell at the thought of moving home and I don’t know what to advise. Can anyone help?

[Deleted User]

I should add that with his income he would have been able to afford the prior mortgage repayments but for reasons unknown he has switched to interest only. 

devoncop22

Sorry to hear about your Dad.

Presumably the house should have built up some decent equity in the last 13 years. Could he not sell it, pay off the existing mortgage and use the balance to fund a new house with a small REPAYMENT mortgage ? He may need to downsize a bit but would that not be a lot less stressful ?

[Deleted User]

We have tried to discuss that with him but he is confined to the house and doesn’t go outside (struggles to go into the garden) so he won’t hear of that as an option. I was hoping that there may be another solution? 

devoncop22

In that case it may need him to get some effective treatment for his illness before he can make a rational decision. Hopefully that is happening. Is there any chance he needs you or someone else in the family he trust to get a Power of Attorney ?

[Deleted User]

He has been involved with mental health services for the past 20 years, took early retirement, in and out of hospital etc but his illness is such that recovery isn’t really possible. My mum and I have power of attorney already but that was only established a few years ago. I didn’t know anything about his mortgage until yesterday unfortunately. I’m at a loss - could I go to citizens advice?

tacpot12

With a power of attorney, you can convert the mortgage to a repayment mortgage without his permission. It would appear to be in his best interests to do so. Can he afford this? As his Attorney, you should be able to answer this. 

[Deleted User]

Yes I believe he can afford it as he will be starting to receive his old age pension imminently so doesn’t have that money factored into his monthly outgoings. I would hope that amount combined with the amount that he pays at the moment would be enough. Would he qualify for a mortgage at his age do you know?

diystarter7

Hi OP
Sorry re your dad
IMO, try to see ahead, get docs opinions, consider selling but I doubt that is what dad wants and its the last thing anyone want when in situations like dad

Just a heads up = there is help if dad sells at some time and can seek, investigate shelter housing before he sells if that is what he wants

Good luck

devoncop22

Hi again OP.

Yes it is certainly possible to get a mortgage even after retirement age though the length of the term may be shortened (and therefore repayments would be higher).

Another option is a specialist Retirement Mortgage which is interest only and the loan is repaid if you Dad either died, moved into a care home or decided to sell sometime in the future from the sale of the house.

Just a thought.

elsien

Deleted_User said:

He has been involved with mental health services for the past 20 years, took early retirement, in and out of hospital etc but his illness is such that recovery isn’t really possible. My mum and I have power of attorney already but that was only established a few years ago. I didn’t know anything about his mortgage until yesterday unfortunately. I’m at a loss - could I go to citizens advice?

You may have power-of-attorney, but unless he lacks capacity around his finances at this point you can’t use it without his agreement. So you need to be very clear on his understanding, and that his ostrich impression is not simply an unwise decision.

There are a lot of people in debt who make very bad choices, but it doesn’t mean they don’t know what they’re doing.

The presumption has to be the same as a starting point for your stepfather,  even with his mental health issues.

In terms of the mortgage, there would appear to be no reason to suppose that he didn’t know what he was doing at the time. So now it’s likely to be mitigating the outcomes.
Other than the stress and fear of change what are the reasons he doesn’t want to downsize?  If he’s living somewhere with a garden that he never uses, finding a smaller more manageable place might be better for him in the long run.
 Would he be willing to share the issue with his mental health team?