87yr old father will be 99 when interest only mortgage expires - was he mis-sold?
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Teabay
Posts: 5 Forumite
Hi,
My father is 87. In 2011 when he was 77 he and my mother (died 3 years ago) needed some money.
They remortgaged the family home and took out £59k ish from the already paid off mortgage, with Alliance & Leicester. Their mortgage was already fully paid off. My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
My dad will be 99 years old when the interest only deal comes to an end, and £60,000 will be due in 2029.
Was he mis-sold? Clearly, they were both retired when they took this out, and have absolutely no savings or means of paying it off, bar selling up when he is 99.
What should I do to help him? How can we minimise costs? Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need £60k debt in my late 60s when hopefully I will be retired!
The house might sell for around £180k. It is unchanged since around 1973!!
Thank you for reading so far, I appreciate all of your advice.
Rebecca.
My father is 87. In 2011 when he was 77 he and my mother (died 3 years ago) needed some money.
They remortgaged the family home and took out £59k ish from the already paid off mortgage, with Alliance & Leicester. Their mortgage was already fully paid off. My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
My dad will be 99 years old when the interest only deal comes to an end, and £60,000 will be due in 2029.
Was he mis-sold? Clearly, they were both retired when they took this out, and have absolutely no savings or means of paying it off, bar selling up when he is 99.
What should I do to help him? How can we minimise costs? Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need £60k debt in my late 60s when hopefully I will be retired!
The house might sell for around £180k. It is unchanged since around 1973!!
Thank you for reading so far, I appreciate all of your advice.
Rebecca.
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Comments
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They remortgaged the family home and took out £59k ish from the already paid off mortgage, with Alliance & Leicester.
What did he do with the £59k?
A&L didn't do equity release. It wasnt a product they sold.My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need £60k debt in my late 60s when hopefully I will be retired!
Switch it to equity release.
Or did he mis-buy?was he mis-sold?
As it happens, an interest only mortgage is about 2-3 times cheaper than equity release. So, he has had 7 years of lower cost than an equity release mortgage. So, its been a lucky outcome whichever way you look at it.
the choice now is to keep paying and hope he dies before age 99 (excuse the crude way of putting that but it is effectively what that option entails) or switching to equity release.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It seems pretty likely that, for one reason or another, the house is going to have been sold before he turns 99. And if it isn't, he's got plenty of time to plan ahead and e.g. downsize to something affordable using his equity.
Or the lender may well persevere rather than demand the capital back immediately ("bank evicts 99 year old" is never good publicity...).
Not sure why it would be misselling - do you think they ought to have sold him an alternative (and inevitably more expensive) product instead? Or just not given him the money, even though he "needed" it?0 -
Hi,
My father is 87. In 2011 when he was 77 he and my mother (died 3 years ago) needed some money.
They remortgaged the family home and took out £59k ish from the already paid off mortgage, with Alliance & Leicester. Their mortgage was already fully paid off. My dad 'thinks' that he took out 'equity release' although all his paperwork says 'remortgage''. He still has all his marbles, but is (clearly) not very money savvy. I have only just discovered all of this - I am 55 and have my own mortgage!
My dad will be 99 years old when the interest only deal comes to an end, and £60,000 will be due in 2029.
Was he mis-sold? Clearly, they were both retired when they took this out, and have absolutely no savings or means of paying it off, bar selling up when he is 99.
What should I do to help him? How can we minimise costs? Alliance and Leicester are keen for me to join him on the mortgage and transfer it to repayment but I don't need £60k debt in my late 60s when hopefully I will be retired!
The house might sell for around £180k. It is unchanged since around 1973!!
Thank you for reading so far, I appreciate all of your advice.
Rebecca.
Is he paying the mortgage interest out of his pension, or is it being added to the mortgage?
Realistically, even if he survives to age 99, the chances are very strongly that he won't be able to live on his own in the family house at that age. So, probably well before then, he'll sell up and come and live with you, or sell up and use the sale proceeds to pay care home fees.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Thank you. I feel that he may have 'mis-bought' rather than have been mis-sold. I guess I am surprised that the A&L would even consider remortgaging a retired couple with no income and no plan for repayment - was this usual then?
If he dies aged 100, is the debt gone? Or will I (next of kin) be liable for it?
Currently he pays £150ish pm from his savings / pension.
Thank you for your advice so far.
£59k - they bailed my brother out with it, he made bad choices, nothing left, he sadly died so all is gone (let's not go there..)0 -
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....He still has all his marbles, but is (clearly) not very money savvy....
Even 77 years olds are quite capable of being rational. But why do you think he is "not very money savvy"? What do you think he's done wrong? Does he think he was mis-sold? Or are you just a bit miffed he has spent some of your inheritance?
The average life expectancy for an 85 year old is 92. There is a 1 in 10 chance of reaching 98, and a 1 in 20 chance of reaching 100.
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/articles/whatareyourchancesoflivingto100/2016-01-14
And probably a much bigger chance of your father needing a care home, at which point the house would be sold to fund the fees.0 -
I guessed I'd be selling the house and paying it off with the proceeds, yes.
Money savvy - I think I'm annoyed that they didn't tell my brother to get a grip and build his own debts, and that they took on an interest only mortgage when they could have afforded a repayment loan!
It's likely that my dad will make 99, maybe independently. At 87 he's still driving, giving talks, going to the city for concerts etc at least twice a week - in fact, he's out more than me!
Is there a benefit or a drawback to me going on a repayment mortgage with him right away? Any tax / inheritance drawbacks?
Thank you for your advice and patience!0 -
10 years younger seven years ago?0
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!!!55357;!!!56833;
Took it out early 2011.
88 next month.
He'll be 99 when it finishes.
Sorry if my numbers are out0 -
Not sure why the weird numbers appear at the beginning, I didn't put them there...0
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