Interest only mortage ending - what to do next?

simpywimpy

My dad is 78 and has £30,000 on interest only and the current deal ends in December.

He wont be able to remortgage through many lenders because of his age so the question is what is the best way forward.

We could pay half of this in cash but would have little savings left. I thought about getting a 15k loan for the remainder as then it would be paid off quickly for probably not much higher a rate than we would be offered at alliance and leicester.

Any suggestions gratefully received

lisyloo

My dad is 78 and has £30,000 on interest only and the current deal ends in December.

What was/is the plan to pay this off? or was there not a plan?

We could pay half of this in cash but would have little savings left.

When you say "We", whose savings are these?
I'm asking because there may be inhertitance tax, long term care or benefits issues if you are transferring money.
So is this your money or his?

What's his general situation?
Does he get a state pension? private pension? other benefits?
Not being nosey but it would help to know as he may qualify for benefits especially if he reduces savings.
If you give more information about his overall situation e.g. amount of savings and general income level then we may be able to help.
With savings of less than £16K you can apply for council tax and housing benefit (depending on income of course).
My husbands parents qualified for pension credit when they had £27K.

I thought about getting a 15k loan for the remainder

Is this a loan in your name?
There are implications here e.g. if you get the loan and all your Dads assets are used in long term care then you may lose your money.
It's important to be very careful here if thinking of transferring money between the two of you.

not much higher a rate than we would be offered

Who are "we".
Is this you and your Dad? or you and your spouse?
It's very important we clarify this because of the benefit, long term care and inhertance tax implications.

Whilst it's illegal to deliverately "deprive" yourself of assets, it may not be best for you to help your Dad because it may only result in a loss of benefits and possibly and eventual loss of your money.

Need more answers to comment further.

simpywimpy

my dad only owns half the house, my mum died in november and her half is in a discretionary trust and will pass to me on dads death as will his half share

He is approx 50p over the income threshold for pension credit so can't qualify for that. He could be eligible for help with CT.

Currently the mortgage is in joint name with him and my mother. I speak of "we" meaning the family.

We are ok for iht as we have covered this well. All his savings have been removed from accounts in his name.

I have a feeling that the alliance and leicester rate will increase to 7% and we don't want to pay this. We have already paid part of the mortgage off (10k) which now leaves us with 30k to pay and 15k in savings that we could use towards paying a large chunk off.

simpywimpy

he gets a full state pension, dla middle rate care and a small private pension

homer_j_3

how much does he earn?

simpywimpy

earn? he's 78

dmg24

simpywimpy wrote: »

earn? he's 78

From his pensions, DLA etc.

horza

Does he live in the house by himself? As he receives DLA middle rate care he may be entitled to a disability premium under premium credit which would increase his income. If he qualifies for the Guarantee credit part of Pension Credit he would then qualify for full Council tax benefit. Housing costs for a mortgage can also be looked at under Pension credit.

If even after all that he did not qualify for Pension Credit at all then his state pension and Personal pension must be nearly £200 a week!

Check out the entitledto website for a quick benefit calculator.

simpywimpy

sure he doent get that much. he lost his pc after mum died. before that he was getting about 60 pound a week guarantee credit

homer_j_3

So even with a lender that would lend at his age, his income is way insufficient.

I would focus on reducing the debt by paying that off and then looking at maybe overpaying on the mortgage where possible to reduce the last 15k off.

I would try and leave some money for an emergency but the information on here is not very clear to his Financial position and it may well be worth taking time to fully explain

What income he does receive from all sources (you say he is 50p over the limit but another poster states pension credits were being paid at 27k which isnt £60 a week??

What savings he does have from all sources (is that 15k what you took out of his named accounts for IHT reasons or is there more)

What would your father like to happen, is he happy paying a reduced mortgage for the rest of is life or do you want to overpay to try and reduce?

simpywimpy

He gets £94 state pension a week. £240 a month private pension, £50 a week industrial injuries benefit and £67 a month from my mothers pension as a widower.

I have about 26k that is technically his so thought paying 15k would be realistic without leaving us penniless.

We would ideally like to pay it off altogether then its one less outgoing as I pay it for him. He;'s just happy to do whatever I think is best really