Urgent advice needed regarding interest only mortgage and death

Sharne15

Hi everyone. My friend's husband has unfortunately passed away quite suddenly and he had no death insurance, they also have an interest-only mortgage that ends in 7 years. My friend who is 64 does not work and doesn't claim any benefits as her husband worked and they managed. Unfortunately, she is now left with a mortgage of £70,000 and no funds to help pay the mortgage. Has anyone got any advice that I  can pass on to her? I will be advising her to go to CAB but any other advice will be extremely grateful, Thank you xx

msb1234

if he was employed, he may have some death in service benefit. She needs to speak to his employer.

Savvy_Sue

What other assets did he / does she have? 

What was their plan for paying off the mortgage in seven years? 

She will need to find out whether he was entitled to a Death in Service payment from his employer, or a pension which will now kick in. 

At the end of the day, unless she has some other means of keeping up with the regular payments or paying off the mortgage, she's going to have to sell. 

Keep_pedalling

As above, first thing to do is check whether there is any death in service benefit going to be payable. She should also contact the mortgage provider to inform them of his death. Hopefully they should give her some breathing space to allow her to get thing sorted.

What is the current house worth? If there is sufficient equity she could pay off the mortgage either by downsizing or taking out equity release. 

Was the mortgage in his name only?

Claude_and_Eustace

On top of all the other advice, it sounds as though she may be eligible for Bereavement support. It pays the initial amount out quickly which should offer a little breathing space. But contacting his employer and any previous employers (i found another pension I didn’t know about this way) should be a priority as they can take a while to sort out. 

https://www.gov.uk/bereavement-support-payment

Sharne15

Thank you so much for the great advice. The mortgage is in both their names and I guess equity release is something to look at. However, she has disclosed that they both have bad credit so an equity release may not be feasible. 

LightFlare

You say she does not work - but can she ?

If so, she may need to. Does she even have NI contributions for state pension ?

Sharne15

LightFlare said:

You say she does not work - but can she ?

If so, she may need to. Does she even have NI contributions for state pension ?

My friend worked from 16 to 63 and gave up a stressful job as this was impacting her mental health so she will have NI contributions, I thought you weren't entitled to a state pension until you're 65/67 years of age??? At this moment in time, I can't see her going back to work for quite a while.

p00hsticks

Sharne15 said:

LightFlare said:

You say she does not work - but can she ?

If so, she may need to. Does she even have NI contributions for state pension ?

My friend worked from 16 to 63 and gave up a stressful job as this was impacting her mental health so she will have NI contributions, I thought you weren't entitled to a state pension until you're 65/67 years of age??? 

You're not (the State Pension Age is now 66 rising to 67). 
But even on reaching that age, if you haven't made sufficient NI contributions or got enough NI credits during your working life you may not be entitled to the full amount, which I think is what LIghtFlare was pointing out may need looking into,
From what you say it sounds as if she will get a full state pension (and it would probably work in her favour if she got a bit less, as she might then be eligible for Pension Credit when she reaches SPA.

As a previous poster says  she should be eligible for Bereavement Support, but the other benefits potentially available to her would I think either require her to look for work (Universal Credit)  or have health issues that prevent her doin so (ESA)

Flugelhorn

Sharne15 said:

LightFlare said:

You say she does not work - but can she ?

If so, she may need to. Does she even have NI contributions for state pension ?

My friend worked from 16 to 63 and gave up a stressful job as this was impacting her mental health so she will have NI contributions, I thought you weren't entitled to a state pension until you're 65/67 years of age??? At this moment in time, I can't see her going back to work for quite a while.

it sounds like she will have entitlement to state pension with those NI contributions but probably needs to check the actual forecast. She may be eligible for other benefits if unable to work owing to illness.

The IO mortgage is a problem though - monthly payments are probably cheaper than rent but somehow the money has to be paid at some point  - is there much equity to be able to downsize?

Keep_pedalling

Sharne15 said:

Thank you so much for the great advice. The mortgage is in both their names and I guess equity release is something to look at. However, she has disclosed that they both have bad credit so an equity release may not be feasible. 

Did her husband have any other debt at the time of his death? Does she have any? If there is debt is any of it secured? 

Having a poor credit rating or small amounts of unsecured debt does not automatically mean you can’t get ER as there are no repayments.