Ex Northern Rock mortgage prisoner advice

john95346

My in-laws are near the end of their ex Northern Rock interest only mortgage. To cut a very long story short, they cannot pay off the loan. But have never missed a payment as far as I know. 

I presume they are with Cerberus. They are nearly 90 years old. 

Does anyone know if Cerberus will consider converting the mortgage to a lifetime interest only? 

A lifetime interest only mortgage would suit them fine.

Surely Cerberus would prefer this than repossessing them?

I had a quick search of historical posts but didn't see anything obvious. Apologies if I missed anything. 

MWT

john95346 said:

A lifetime interest only mortgage would suit them fine.

Surely Cerberus would prefer this than repossessing them?
 

The optics are never going to be good for the lender for sure, but even if they would do that are you sure that is the best choice for your in-laws as even if it is manageable for them both now, would that still be the case if it was only one of them remaining to deal with the problem?

I know with a lot of these old Northern Rock mortgages there is often very little equity in the property, do you know if that is the case here?

Just wondering if there are any other solutions that might be possible to consider as while it may not even be possible for the current lender to offer that sort of product, there are perhaps others who could... ?

Hoenir

john95346 said:

Surely Cerberus would prefer this than repossessing them?

Cerberus themselves are not a regulated lender and therefore have no ability to grant new mortgages. They are purely running off what's left of the old Northern Rock mortgage book. 

Your parents aren't mortgage prisoners per se. They knew that the money ultimately had to be repaid or the property sold. The interest rate they are paying currently is unlikely to be any worse than when they first borrowed the money many years ago. 


How much is the property worth and what's the amount of the outstanding mortgage? 

Why hasn't action been taken earlier to switch to say a lifetime equity release mortgage? 

ACG

As Hoenir says, the biggest issue will be whether or not they are actually able to do anything. 
Regulation is good in many ways, but it can also bring problems with it and this is potentially one of them - even if they wants to help, I am not sure they can. 

That being said, it might be possible to get an interest only mortgage, but realistically they will probably need to speak to a broker with experience in that part of the market (its not really my thing so I am not best placed to answer, but I think there should be options). 

MWT

It really does all depend on the value of the property and the balance owed on the mortgage...

There are a lot more concerns after that, like method of construction, adjacency to commercial premises, state of repair etc. but no point in even starting down the path if there isn't enough equity in the property...

john95346

Thanks for comments. 

It's been a long journey to this point. Unfortunately my in-laws have never been good with budgeting. And as much as I'd have liked to seize control of their finances over the years, obviously this was not possible. I could only watch from afar as their options dwindled to where they are today. It was only in recent years when I leaned the full extent of their situation. Too late to make any serious inroads into the amount owed. 

My FiL had hoped he'd be able to secure an equity release mortgage to pay off the original. But there is nowhere near enough equity.

But there is enough to pay off the mortgage and leave a bit besides. And that is what they're currently pursuing. And renting a similar flat instead.

Good point about if one of them alone could continue with the interest payments. 

MWT

john95346 said:

My FiL had hoped he'd be able to secure an equity release mortgage to pay off the original. But there is nowhere near enough equity.

But there is enough to pay off the mortgage and leave a bit besides. And that is what they're currently pursuing. And renting a similar flat instead.

Good point about if one of them alone could continue with the interest payments. 

Thanks for the details, sadly I suspected that would be the case so equity release is not an option, and they would probably not pass the individual affordability tests for a Retirement interest Only (RIO) product. 

So selling is the only realistic option for them.

I hope it can progress smoothly for them, and to reduce stress, better done sooner rather than later as they don't want to bump into the end of the mortgage period without a sale in progress.