REMORTGAGE ADVICE

desperate_dan_9

My dad has passed away, half way through a 25yr mortgage. He was not a stupid man & believed he had taken out a repayment mortgage.
We now find that it was interest only & there was no life cover to cover the loan.
The problem is that in 12yrs the lender is going to want the capital element of the loan repaying & my mother cannot afford to remortgage to capital & interest so will probably be forced to sell her home to repay the loan.
Are there any schemes that she can remortgage to that will allow her to continue to pay interest only and then take the capital element upon her death.
Equity release schemes will not work due to her age(65) & loan to value (23k outstanding & property value of 70k).
Any replies would really be appreciated.

MarkyMarkD

If he took it out 13 years ago, why was he not advised that either it should be repayment (with decreasing term life cover) or that he should have a repayment vehicle (e.g. an endowment with in-built life cover)?

Have you considered if he was mis-sold?

Or did he actually have an endowment and then surrendered it without replacing either the life cover or the repayment vehicle?

I mean this as a genuine question. Often people bought endowment mortgages and the lender messed up the admin and the policy was never set up. In such cases, the ombudsman will make the lender make up much or all of the difference.

MarkyMarkD

Oh and btw there are some lenders who will do "lifetime mortgages" which are interest only forever until you die.

desperate_dan_9

Dear Marky Mark,
Thank You for your reply to my query on moneysavingexpert. At last a light at the end of the tunnel!
In reply to a couple of your questions, we have no way of knowing whether or not my Father was mis-sold as the mortgage was arranged through a broker who has sold up & retired some years ago.We do not know whether he had taken out & cancelled any life policies (we have searched in vain through his bank etc ).You also say that there are some lenders that will consider lifetime mortgages on an interest only basis. 1)Could you please let me know who these lenders are?
2)Can you help to arrange these schemes?
3)Do you have a contact telephone number?
MANY MANY THANKS,
DESPERATE DAN

MarkyMarkD

Thanks for your appreciation.

I can't advise you specifically because I'm not an independent financial adviser. But I'm happy to point you to some helpful information.

Channel 4's website has some information on lifetime mortgages here:

http://www.channel4.com/4money/mortgages/features/equity_release_schemes_030904_page3.html

Providers include: Cambridge BS (in East Anglia only), GE Life, Harpenden BS, Holmesdale BS, Legal & General Mortgages, Mortgage Express, National Counties BS, Newbury BS, Newcastle BS, Northern Rock, Norwich Union, Portman BS, Prudential, Scottish Widows Bank, Standard Life Bank, Stroud & Swindon BS, The Staffordshire

They should be happy with a low loan to value of around 33% but they may see £23k as a bit low to be worth borrowing with; however, it wouldn't seem a bad idea to increase the mortgage to £25k if that qualifies her for better value products (and if she could do with the extra £2k).

I'm sorry that you can't establish whether mis-selling took place - it certainly sounds like it might have. Before you go any further, I would ask the lender for a copy of the original application form as this would show

(1) whether he actually asked for repayment, and they just set it up wrong; and
(2) what the repayment vehicle for the loan was meant to be and hopefully the provider.

You could then contact the provider of the repayment vehicle to establish if it was set up, and if it was surrended, and so forth.

Hope this helps. Please pm me if you want to discuss further off the board.