Parents bought house for £12K hav paid bac £140,000 still owe £150,000 House worth apx £100,000 HELP

DancingMan

This is complicated but any help would be much appreciated. 

My parent are approaching retirement ... this year. They bought an ex-council house in the 90's for about 11,000. Over time they borrowed against it and by their own admission did not handle that well, however it feels they have been exploited. They have not lived extravagantly. The mortgage has been passed through a variety of lenders and debt management companies. We have recently discovered that over time they have paid in total apx. £140,000 to the current lender since 2012 but yet they still owe £150,000 on a home that is currently worth around £100,000. I have tired the financial ombudsman however my parents were outside the timescale of recross. I have spoken to a number of support organisations who have all been very sympathetic but ultimately have been unable to help. The original mortgage was part part. Any help would be gratefully received. .  

elsien

In what way do you feel they have been exploited? How many loans have they taken out against the house over the years?
When was the last loan/remortgage that they took out? 

billy2shots

Some may argue that they have exploited the system. 

Buying a house for £11,000 subsidised by tax payers, to then leverage hundreds of thousands of £.  

Their mistake was possibly thinking 
 the free lunch could continue. 

noitsnotme

DancingMan said:

 Over time they borrowed against it

This is the key part.  How much extra have they borrowed against it and on what terms?

housebuyer143

To still owe £150k they must have borrowed a lot against this house. If they spent the money then they have not been exploited have they, they got what they asked for at the time.

Are they on interest only mortgage? I imagine for them to get into this state they probably are and it explains how they paid so much in interest but still owe the large amount.

There was so much less regulation in the mortgage market pre financial crash and so that things were possible such as interest only, borrowing 120% LTV etc. Many people were not aware what they were signing up to. 

Spendless

I have relatives who did pretty much the same. Then attempted to sort it out with a 20ish year IO mortgage as they neared retirement with no thought to what they'd do when the term was up and they'd made no plan to pay the rest off thinking 'they'd both be dead by then' - only 1 of them was. Another relative has had to step in and buy the property to give their parent somewhere to live. 

penners324

Only way to look at it is to piece together what they borrowed over time.

Mortgage companies used, the fees and late payment charges etc etc 

MWT

DancingMan said:

This is complicated but any help would be much appreciated....

Sadly, I don't think it is all that complicated...

They borrowed more than they could repay and have left it far too late to fix the problem with the time remaining on the mortgage...

Do you know when the current mortgage term ends?

From what you've said, they are going to need to sell the house and raise another £50k somehow just to clear what they owe, so some idea of the time available would be helpful.

They may be an extreme case, but they are not alone in mistaking the lax 'self-certified' lending criteria as a route to large amounts of money without any thought to the future.

No obvious way to get any of what they owe reduced through a complaint at this stage, but more details on the most recent occasion upon which the mortgage was changed or additional sums borrowed might open a window of opportunity...

penners324

They may need to dip into their pension pots to help clear this unfortunately 

DancingMan

Thanks for the comments (and the judgement). They did subsume about £60K worth of debt into the mortgage, the primary reason for the significant amount of money still owed is due to the amount of interest they have been charged/paid. 

I appreciate that some people and maybe many will feel they are in a hole of their own making and they would accept that is the case to some degree. However they, like many during the 90's, were provided with incorrect financial advice (or indeed none in their case) about essentially "free money" and the banks have just continued to make profit in terms of interest when people like my parents have actually paid back the actual original amount borrowed.  

I appreciate some will disagree however I am here trying to see if anyone has any advice in relation to recourse so they don't end up loosing their house. I will respond to some of the responses individually. Thanks

housebuyer143

DancingMan said:

Thanks for the comments (and the judgement). They did subsume about £60K worth of debt into the mortgage, the primary reason for the significant amount of money still owed is due to the amount of interest they have been charged/paid. 

I appreciate that some people and maybe many will feel they are in a hole of their own making and they would accept that is the case to some degree. However they, like many during the 90's, were provided with incorrect financial advice (or indeed none in their case) about essentially "free money" and the banks have just continued to make profit in terms of interest when people like my parents have actually paid back the actual original amount borrowed.  

I appreciate some will disagree however I am here trying to see if anyone has any advice in relation to recourse so they don't end up loosing their house. I will respond to some of the responses individually. Thanks

Unfortunately I don't think there is any recourse as long as the lender has been following the terms of the mortgage they signed. Many people were sold mortgages that were not suitable for them but because the regulation was not there to stop this the lenders have done nothing wrong, so there is no one to complain to.

How much longer is left on the mortgage before they need to repay the loan?