Interest only mortage ending - what to do next?

LittleMissAspie

simpywimpy wrote: »

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.

So £930 plus the DLA middle rate which is apparently 44.85 per week, makes £1124 per month. That's more than I bring home! Does he have to pay income tax on any of that?

If you paid off half the mortgage he should easily be able to cover payments for the other 15k.

homer_j_3

It could be possible for him to remortgage based on that.

I am not sure how to take the "its technically his but will leave us penniless comment" I am sure you will discuss with your dad all the options but unless the interest is earning more than the mortgage is charging then it would work harder against the property imo.

HelpWhereIcan

FraudBuster wrote: »

Deprivation of Capital?

for long term care purposes - possibly. But not if used to repay the mortgage I would have thought.

Could also be classed as a Gift with reservation for IHT purposes depending on exactly what has happened with the transfer of savings.

what is best to do with this case depends on a number of things, but 'remortgaging' to an equity release product may be a way to get the mortgage onto a 'lifetime' basis without having to rely on finding a lender who will do a remortgage now followed by another series of times when you will have to find yet another lender and pay the associated fees.

It may also be a way of getting rid of the monthly payment without having to eat into those savings.

You need specialist mortgage and legal advice though and need to be aware that it has effects on the value of your inheritance as the interest (which will be higher than 'norm') will normally be rolled into the loan.

Advantage could be that your father gets to stay in the house until death/he goes into long term care without having to worry about monthly repayments or losing some of his savings. He may also be able to raise an additional lump sum if he wishes.

Get some specialist advice - your scenario is not suitable for DIY or answers given in an internet forum. Without the correct legal & mortgage advice you could end up making some costly mistakes just cos abc said on a forum that xyz bank will lend to a 78 year old until he is 85. Likewise, opting for equity release just cos I have suggested it could be wrong if not done for the right reasons. Generally if he has the funds to repay the mortgage, he should. How that fits with his plans is another thing.

Ideally use personal reccomendations to pick an adviser or even something like the Yellow pages etc. Make sure that you check that their can either advise on equity release themselves (it needs a specialist licence) or refer you to a colleague/firm who can.

Hope this helps

Good Luck

simpywimpy

we have no iht concerns. Mum died recently and didnt use hers so he now has double and we are nowhere near that!
Deprivation of capital? He gave it to me but I think he should use it to pay off the mortgage as much as possible as homer j said, the interest rate on the next mortgage is likely to be as much, if not more, than the best rate we are getting at the moment which is 6.7 on a 1 year deal that finishes in october

HelpWhereIcan

simpywimpy wrote: »

Deprivation of capital? He gave it to me

I hope the only reason you are so confident this transfer would not fall foul of the council's means test is that your dad is currently fit & healthy.

If not, be warned that the 'rules' IMHO are fairly loose and open to the council's interpretation. Also, unlike IHT, there is no formal period after which the transfer will not count.

http://www.ageconcern.org.uk/AgeConcern/Documents/TRANSFEROFASSETSFS40JUN07.pdf

simpywimpy wrote: »

but I think he should use it to pay off the mortgage as much as possible as homer j said, the interest rate on the next mortgage is likely to be as much, if not more, than the best rate we are getting at the moment which is 6.7 on a 1 year deal that finishes in october

From what you have posted, this is probably your best course of action.