Parents in financial dire straits - any advice?

[Duffychick]

Hi all,

 

My parents are both 71 and have lived in their home for 24 years. A charge was put on the property many years ago when my dad was made bankrupt in the last recession. As far as he was concerned the charge would be re-paid when he and my mum passed on and the house was sold.

A couple of years ago all the rules changed and charges were all called in. As a result of this they had to re-mortgage and pay it all off.

They now find themselves with their lovely home and no real way of being able to settle the mortgage before they die (hopefully many many years away).

Their pensions and my dad's work as a driver currently cover things but this isn't going to last. They wanted to do the mortgage rescue plan but it's not up and running in this area yet. They've looked into equity release but there doesn't seem to be too many reasonable ones around that won't leave us kids with any debt or rip them off. The amount they would get for the house if they sold wouldn't leave them with enough to get a smaller place without leaving them with a big mortgage still.

Any suggestions as to what they can do would be greatly appreciated.

 

thanks

[gizmo111]

They've looked into equity release but there doesn't seem to be too many reasonable ones around that won't leave us kids with any debt or rip them off.

 

You will never be left with your parents debts. Equity relaese can be a good thing but also has many pitfalls and should be considered very carefully.

How much do they owe and what income do they have? What is the monthly repayment?

Are they paying interest only or repayment mortgage?

How many years left on the mortgage?

[Duffychick]

You will never be left with your parents debts. Equity relaese can be a good thing but also has many pitfalls and should be considered very carefully.

How much do they owe and what income do they have?approx £1400

What is the monthly repayment?£480

Are they paying interest only or repayment mortgage?interest only

How many years left on the mortgage?8 years

Thanks Gizmo, have got the info and inserted as above. As you can see they have nothing to pay the capital off with at the end of the term. Their pensions (£1100) cover their living expenses including the mortgage, a loan and a cc and the remaining £300 covers food and utilities.

 

any help gratefully received:-)

[gizmo111]

Thanks Gizmo, have got the info and inserted as above. As you can see they have nothing to pay the capital off with at the end of the term. Their pensions (£1100) cover their living expenses including the mortgage, a loan and a cc and the remaining £300 covers food and utilities.

 

The trouble with this is even if they sold up they would not be eligible for housing benefit and would still be paying a similar amount on housing.

How much longer on the loan and CC? How old are these debts?

What are the balances?

What sort of equity do they have? How big is the mortgage?

 

EDIT - sorry if it all seems questions.

[Duffychick]

Hi Gizmo,

 

No problem with the questions, I've asked dad to get the info together and let me know. I was a bit worried that he might think I was interfering (in a nice way) but when I told him what the site is all about he was impressed:oops:

[Duffychick]

Ok, I've managed to get as much info as possible from the parents:

 

Outstanding interest only mortgage £110,000 paying £480.33pm with 7.5 years left. House worth £200,000 max.

 

Consolidation Loan with Lloyds TSB £22,000 o/s paying £288.32pm with 6yrs 4 months left. (I personally think this was mis-sold as bank should have told dad to get debt advice)

 

Credit cards - Sainsburys o/s £400 and NatWest o/s £800. Sainsbury card is ancient and NatWest is recent.

 

Total income is £10168 state pensions and £4407 private pensions. They've applied for pension credit and are waiting for a response.

 

I'm so upset that they've kept this from us (although I completely understand), we knew there were problems but not to this degree. I'm also so angry that a young bank manager thought that giving a couple (then) aged 69 a consolidation loan rather than proper debt advice was best practice. The loan itself was for £17k and the interest over 8yrs took it to £25k!!!!!:-x:-x

 

Any and all advice on how they can get out of this mess and live the rest of their lives without stressing would be fab.

 

thanks

[gizmo111]

What have they in place to pay the mortgage off when the term ends?

[Duffychick]

Hi Gizmo,

 

the short answer to that is nothing. they have no endowment or savings etc in place.

[gizmo111]

No way of paying is a little worrying.

 

They are paying around 5.25% on their current mortgage - who is this with? is it fixed rate - when does the deal end? If not fixed what are the terms of the mortgage?

[Duffychick]

The fixed rate ends in 3 years time with the penalty clause ending in July this year.

 

I will admit it's more than a bit worrying:confused:

[gizmo111]

Who is the mortage with?

[Duffychick]

sorry, it's GE Money Home Lending

[Duffychick]

BUMP

 

Anyone???

[gizmo111]

I don't know what they can do other than sell the property and rent. They won't be in any better position in 7 years time when the mortgage ends and GE are not a sympathetic lender.

 

Is there any possibilty you and your siblings could help out at least with the lloyds loan?

[Duffychick]

Hi Gizmo,

 

Thanks for having a think, unfortunately none of us are in the position to help. He's made the claim for bank charges so I think he'll now need to appeal due to reasons of financial hardship.

The only other thing I can think of is to approach Lloyds, explain the situation and see if they can reduce the payments as well.

 

DC