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    • mrmanlondon
    • By mrmanlondon 9th Jan 18, 4:54 PM
    • 2Posts
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    mrmanlondon
    Lifetime mortgage for father
    • #1
    • 9th Jan 18, 4:54 PM
    Lifetime mortgage for father 9th Jan 18 at 4:54 PM
    Hi All,

    My father is in his early 70's. He owns his ex-local authority flat outright. He has recently received a hefty £15k bill for communal refurbishments/improvements that have been done to the block/estate where he lives. He is liable for the bill under his leaseholder agreement. He has a very low income, so making monthly payments isn't an option. The council have said that they could put a charge on the property for the amount owed. However, my father would like to stop having to work full time as it is taking a toll on his health. We are thinking that maybe some sort of equity release/lifetime mortgage would be the best option. With this he could clear his debt, refurbish his flat and have an income to live off to save him having to work full time. Neither myself or my sibling can afford to pay any interest or help with the 15k debt.

    Any advice as to any alternative options or best way forward with the equity release would be great. I hear so many scary stories about these types of schemes, but surely it can't all be bad?

    Thanks!
Page 1
    • Mnd
    • By Mnd 9th Jan 18, 7:18 PM
    • 546 Posts
    • 645 Thanks
    Mnd
    • #2
    • 9th Jan 18, 7:18 PM
    • #2
    • 9th Jan 18, 7:18 PM
    My outlook on equity release is different to a lot of the opinions on here so I will put my view.

    We are 63 me and 58 wife. Our house is valued at £300k no mortgage. When my wife has retired and we need the money I am quite prepared to use some of the capital tied up in the house.
    But.. we are not in the position of worrying about inheritance as the interest rolls up onto the original loan as well, so it does build up fairly quickly.
    So if your dad is hoping to leave you 2 his house (and presumably you would like this as well) then equity release will eat into this
    So I think you can arrange a no obligation meeting and make sure you know what it's going to cost in the long run it may be worth exploring.
    Your father will never owe more than the value of the property, and importantly you don't have to take all the money that's released
    I hope this helps, as I say, I am in favour of this in the correct circumstances, only your father with your help can decide if it's the right solute for you

    Good luck..M
    • Edi81
    • By Edi81 9th Jan 18, 7:38 PM
    • 469 Posts
    • 320 Thanks
    Edi81
    • #3
    • 9th Jan 18, 7:38 PM
    • #3
    • 9th Jan 18, 7:38 PM
    Equity release mortgages will only lend a %age of the value of the property.

    Remember, if interest is applied to the balance each month this will quickly build up. In the end there may not be much left for you and your sibling. Your father needs to take this into consideration especially if was wanting to leave you an inheritance.

    Saying that, equity release may be option although the option that the council has given regarding a charge shouldn!!!8217;t be discounted.
    • Mnd
    • By Mnd 9th Jan 18, 8:39 PM
    • 546 Posts
    • 645 Thanks
    Mnd
    • #4
    • 9th Jan 18, 8:39 PM
    • #4
    • 9th Jan 18, 8:39 PM
    That's right about the %.on enquiries we've made they are estimating about a third, youngest age 62, so that's a ball park figure you could work with
    • Jenniefour
    • By Jenniefour 10th Jan 18, 10:03 AM
    • 1,311 Posts
    • 1,425 Thanks
    Jenniefour
    • #5
    • 10th Jan 18, 10:03 AM
    • #5
    • 10th Jan 18, 10:03 AM
    So there are actually two issues - the £15k and your father wants to stop work. Since your father doesn't have a mortgage (assuming that's what you mean by "owning outright") I wonder why he still needs to work full time now, and why, given that he's working, he has a low income. Does he have other debts? Has he claimed his state pension and is he entitled to pension credit?

    Getting sufficient to clear the £15k, refurbish his flat and provide him with an income would depend on how much his property is worth now - it would need to be a hefty amount to provide all that.

    Charge on the property for the £15k would possibly be a better option than equity release but it sounds as though there are other financial problems here. It's difficult to offer any meaningful advice without more details and it might be worth posting on the debt free board.
    • mrmanlondon
    • By mrmanlondon 11th Jan 18, 12:29 PM
    • 2 Posts
    • 1 Thanks
    mrmanlondon
    • #6
    • 11th Jan 18, 12:29 PM
    • #6
    • 11th Jan 18, 12:29 PM
    Thanks for all your replies. He works !!!8216;cash in hand!!!8217;. Some weeks he can work 6 days on the trott, some weeks only two. So income is sporadic at best. He claims state pension and isn!!!8217;t entitled to pension credits as just over threshold. His property is worth approx £230k in its current condition. A complete renovation will put it in the £250kish bracket, another reason we want to refurbish. One site (L&G) estimated he could get as much as £84k? This would give enough to clear housing debt, give him a small income for 5 or so years and renovate then flat.
    • pinklady21
    • By pinklady21 11th Jan 18, 1:18 PM
    • 610 Posts
    • 423 Thanks
    pinklady21
    • #7
    • 11th Jan 18, 1:18 PM
    • #7
    • 11th Jan 18, 1:18 PM
    What would happen at the end of the five years? The capital gone and a mortgage debt to be paid?

    Would he sell the property at that point? Where would he live then?

    Does he want to sell the property now? Where would he live then?

    Might he have any care needs in future? If so the house might have to be sold to pay for that.


    If he were to stop working now, would he then qualify for pension credit? Take care when you do your research - there are capital limits on some types of pension credit, so if he did take equity release the amount of capital available to him would be taken into account.

    If he might require care, then check out the rules on deprivation of capital if he decides to sell now and give you the inheritance early.
    Best of luck.
    • Jenniefour
    • By Jenniefour 11th Jan 18, 5:59 PM
    • 1,311 Posts
    • 1,425 Thanks
    Jenniefour
    • #8
    • 11th Jan 18, 5:59 PM
    • #8
    • 11th Jan 18, 5:59 PM
    Refurbishing to increase property price is one thing, and sounds very unwise in the circumstances you describe - your father simply cannot afford it. Making the property more comfortable for your father is another. Have a good think about that so money isn't being spent that's not essential and/or won't be of benefit to your father.

    Worth investigating equity release plans but you need to do your research very thoroughly to understand different options and drawbacks/advantages. Look into that before you consider having a charge put on the property.

    His other option is to downsize - is that a possibility that could free up some money?

    How have you worked out your figures for your fathers possible extra income lasting only 5 years? Releasing a potential £84k and paying off the £15k leaves a substantial amount of money. Even if an extra £5k gets spent on the flat that still leaves £64K. That's why I think doing a complete refurb is unwise (that's putting it mildly), it's taking possible future needed income out of your fathers pocket. The focus needs to be kept on your fathers welfare, not on what the flat might be worth in future when he won't be here.
    Last edited by Jenniefour; 11-01-2018 at 6:01 PM.
    • Thrugelmir
    • By Thrugelmir 11th Jan 18, 6:08 PM
    • 58,936 Posts
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    Thrugelmir
    • #9
    • 11th Jan 18, 6:08 PM
    • #9
    • 11th Jan 18, 6:08 PM
    Your father needs to take this into consideration especially if was wanting to leave you an inheritance.
    Originally posted by Edi81
    Sounds as if he would prefer to give up the neccessity to work. Inheritance should be a secondary issue when families consider the well being of their elders.

    Already being in his early 70's. The number of "good" years ahead is diminishing. Enjoy them while one is able.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • AnotherJoe
    • By AnotherJoe 11th Jan 18, 10:18 PM
    • 9,605 Posts
    • 10,683 Thanks
    AnotherJoe
    Hi All,

    My father is in his early 70's. He owns his ex-local authority flat outright. He has recently received a hefty £15k bill for communal refurbishments/improvements that have been done to the block/estate where he lives. He is liable for the bill under his leaseholder agreement. He has a very low income, so making monthly payments isn't an option. The council have said that they could put a charge on the property for the amount owed. However, my father would like to stop having to work full time as it is takinging a toll on his health.
    Thanks!
    Originally posted by mrmanlondon
    No help to the OP but perhaps a lesson for all those folks who pop in here every now and again looking to make a mint on RTB and canít see any downside.
    • Ms Chocaholic
    • By Ms Chocaholic 11th Jan 18, 10:28 PM
    • 9,380 Posts
    • 57,704 Thanks
    Ms Chocaholic
    Just putting another option out there, could he sell up and buy somewhere smaller, paying off the £15k he owes and having some extra money to live on.

    Could he possibly move closer to you/your sister if property prices are cheaper there.
    Thrifty Till 50 Then Spend Till The End

    You can please some of the people some of the time, all of the people some of the time, some of the people all of the time but you can never please all of the people all of the time
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