Parents remortgaging issue

LCG81

I’ll try and keep this short.  My parents (aged 67 and 70, neither work) need to remortgage and are unable to find a lender willing to borrow them enough as they say their income isn’t high enough.  They are short by about 35-40k.  Several years ago they had to move to an interest only mortgage due to a change in income, hence why they still owe a fair amount.  Since then my dad has been diagnosed with terminal cancer so not fit for work anymore.  Apparently they aren’t eligible for equity release, or a retirement mortgage, and not enough money coming in to remortgage.  Do they have any other options?  Or is it simply sell up and downsize? TIA

Brie

So both parents are getting state pension and what else?  Dad should be getting attendance allowance, if not do a fast track application.  

Does the mortgage company know about his health?  Would they be willing to freeze the interest due to this?  Selling up while he is ill (how ill is too ill?) will be very disruptive so I suggest mom keeps downsizing in her back pocket for later.  

Of course there's the family bank assuming you and any siblings are able to assist by loaning money to pay off the balance of the mortgage.  I'd suggest that rather than buying a portion of their home as that leads to all sorts of issues with capital gains on second homes etc.  But properly done a 0% loan repayable when the house is sold might get them through a tough time.  I would definitely suggest a solicitor be involved so there's no problems and no conflict with anything in either parent's will.  Good time to get those sorts of things sorted as well along with POA (but don't use a solicitor for that as you can DIY them at a fraction of the price).

Would talking to CAB, StepChange, NationalDebtline, CMA be possible?  The mortgage might just be the biggest problem they are having and most of these organisations can help set up a good budget as well as linking them in to any missing benefits etc.   

MWT

Sell and downsize would usually be the first choice ahead of equity release, so if that is possible it is probably the best option.

A retirement interest only (RIO) mortgage requires that they can show sufficient guaranteed income on an individual basis, to support the payments, so if their income is too low, it is not surprising that it is not an option.

Did they mention why they are not 'eligible' for equity release...?

Downsizing is still a better option, but generally it is the property itself rather than the borrowers that needs to qualify, and as long as the property does meet the requirements there are generally more favourable terms available for those with a terminal diagnosis which would help with the amount they could release...

Tucosalamanca

Do your parents have any life insurance that has critical illness cover?

LCG81

Unfortunately no life insurance as when my dad was made redundant and went onto an interest only mortgage, they weren’t able to afford any other expenditures deemed non essential - financial advisors advice at the time

LCG81

@Brie thank you for your reply, are you able to tell me more about the 0% loan repayable when the house is sold, what sort of loan is this called?

LCG81

@Tucosalamanca thank you for your reply, Unfortunately no life insurance as when my dad was made redundant and went onto an interest only mortgage, they weren’t able to afford any other expenditures deemed non essential - financial advisors advice at the time

LCG81

@MWT thank you for your reply, the reason they were told re equity release was that they are not old enough, that didn’t sound right to me.

MWT

LCG81 said:

@MWT thank you for your reply, the reason they were told re equity release was that they are not old enough, that didn’t sound right to me.

That isn't right, the lower age limit is 55.

I assume that there is nobody else on the deeds, just the two of them?

Keep_pedalling

What is the value of the house and the amount of the outstanding loan? Age should not be the reason of not being able to get ER.

LCG81

@Keep_pedalling value approx £230, outstanding £104k.  They will only loan approx £70k due to income and situation etc