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To wonder how my parents will afford a home?

(89 Posts)
Chocwocdoodah Mon 19-Dec-16 20:12:33

Posting here for traffic. Will try to keep this short.

DPs were rubbish with money when my siblings and I were kids. As a result, they found themselves in massive debt a few years back and had to take out an IVA to pay off their debts. To their credit, they've done amazingly well and will have paid off the lot - £50k - within the next few months. Obviously though, the IVA will show on their credit rating.

Now the main problem is they have an interest only mortgage and the term ends next year. They have no means of paying it off so will have to sell up. They spoke to their lender to see if there were other options but the best they could offer is to agree to give them a little extra time to sell. They are in their 60s and only earn about 35-40k between them.

My worry is how the hell they are going to afford somewhere else to live? We think they'll get about between 50k -70k profit from the sale but their age, income and the fact they've had an IVA means they almost certainly won't get another mortgage. They think their only option is to rent which they don't want to do (I don't want them to either).

I've looked into those Home For Life schemes where a company buys a house at a discount for you but you put down a deposit. It means they'd have no money to leave as inheritance (as the company keeps the profit from the sale once they die) but none of us gives a stuff about that - we just want security for them.Unfortunately they're not old enough to get a big enough discount.

What other options are there? I'm worried they're going to end up in an extortionate, tiny rental they neither want nor can afford.

5OBalesofHay Mon 19-Dec-16 20:15:10

Do they have enough equity for equity release?

PotteringAlong Mon 19-Dec-16 20:15:54

Do they live in part of the country where they can buy something for £70k?

ChubRub Mon 19-Dec-16 20:18:08

I don't think they will be able to do either equity release or the home for life schemes as they don't own the house. I would think renting is their only option now. Essentially, they've been renting anyway with an interest only mortgage.

sooperdooper Mon 19-Dec-16 20:18:18

Where do they live? There are places in the uk you can buy for that amount, if they need to downsize to a smaller flat then so be it

Manumission Mon 19-Dec-16 20:18:44

Shared ownership? (Including specific retiree SO)

Retiree rental developments?

Mobile home (static?)

Can you specify a region or is that too outing?

Chocwocdoodah Mon 19-Dec-16 20:19:03

50 bales - sorry, how would equity release work?

Pottering - sadly no. We all live in the south east. They would need at least 200k.

YelloDraw Mon 19-Dec-16 20:19:32

Can you do something where PILS sell you a share of the house to you and siblings and you and siblings take out a mortgage? PILs then pay you rent?

Where in the country are you?

What is wrong with getting a small rental flat? Cheaper to run, they won;t have to worry about repairs etc.

cherrycrumblecustard Mon 19-Dec-16 20:20:56

Retirement apartment might be their best option, many are lovely and you could get one for that price around here.

Manumission Mon 19-Dec-16 20:21:01

www.ownyourhome.gov.uk/scheme/opso/

Chocwocdoodah Mon 19-Dec-16 20:21:18

They know they're going to have to downsize so that's ok. Wouldn't shared ownership involve some sort of mortgage - having an IVA on their record would rule that out, wouldn't it?

Sunseed Mon 19-Dec-16 20:21:18

Park home (static caravan)?
Housing association?

Manumission Mon 19-Dec-16 20:23:23

No, some schemes will let them buy a share using their equity and pay rent on the rest - no mortgage.

Foslady Mon 19-Dec-16 20:23:24

Shared ownership - buy a % with the equity and rent the remaining portion (and is eligible for HB if needs be at a later date)

harderandharder2breathe Mon 19-Dec-16 20:23:42

They might not want to rent but they may not have a choice

Chocwocdoodah Mon 19-Dec-16 20:24:07

Yellodraw - my siblings aren't in a position to do that. DH and I possibly could do that but aren't there some sort of tax implications involved in that?

We are in South East.

A rental flat is fine in theory but v expensive and feels less secure.

Reality16 Mon 19-Dec-16 20:24:25

Nothing wrong with renting. A good stash of savings in the bank and renting a place isnt a bad position to be in.

Manumission Mon 19-Dec-16 20:25:14

A certain amount of hitting the phones to speak to competitors will probably be needed whichever tenure they opt for. Credit check policies will vary from provider to provider even for rentals.

RandomMess Mon 19-Dec-16 20:27:55

I agree look at shared ownership where they just rent the rest of what they don't own also static mobile homes - you can get retirement ones although £70k may be tight!

Manumission Mon 19-Dec-16 20:28:10

But I'd anticipate that a visible IVA would be a bigger impediment to a private rental than to shared ownership (equity down, no mortgage) or other affordable scheme.

greenfolder Mon 19-Dec-16 20:28:18

If you go onto the bbc radio iplayer and search for money box and interest only mortgages they did a whole programme about this recently. There was a phone number i am sure where they go through all the options. There was strong advice to call and find out the options before deciding to sell. Do they have equity?

Chocwocdoodah Mon 19-Dec-16 20:28:21

The shared ownership sounds a good option.....is this only available on certain homes?

Sunset - call me a snob and I know they've only themselves to blame for this situation but I couldn't bring myself to suggest they live in a caravan. There are places like that near where they live and they're not occupied by the nicest of people (please don't flame me!!)

5OBalesofHay Mon 19-Dec-16 20:29:28

Sorry I think I'm talking crap as equity release is borrowing against what you already own. Might they have enough equity for something small?

Daisyfrumps Mon 19-Dec-16 20:29:34

Agree with the PP who said they've essentially been renting anyway with an interest-only mortgage. They're lucky to have made a profit on the house.

I think they should try to get into shared ownership or a long term let. Not sure how much a bad credit rating would hinder their prospects in either case, but as least they'll be able to pay a lump sum of rent up front with the house profit.

Chocwocdoodah Mon 19-Dec-16 20:32:53

Wow, so many responses - thank you all so much. The BBC Money Box programme sounds a great idea - I will definitely look that up.

Good point about IVA having a more negative impact on renting, Manumission. Shared ownership does sound a good idea.

Is there any way anyone thinks they could stay in their home or is that out of the question?

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