To wonder how my parents will afford a home?

[Chocwocdoodah]

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.

Newbrummie

They will. This area is what I do for a living. They can repossess and they do. Just because your friends weren't repossessed (which there will be a good reason for that you'll be unaware of as it's confidential) doesn't mean it doesn't happen.

If it gets to court then there will be the addition of legal fees to the debt. Plus other costs involved in repossession (management fees of the property whilst it's being sold). Best price doesn't mean highest price. It means the best price achieved in a reasonable timeframe (as all the time the property is on the market the debt increases due to costs). So they'd likely achieve more selling privately in their own timeframe.

OP please don't listen to this advice, it's completely wrong.

We got a mortgage when we had had a iva. A iva is better the ccjs and being bankrupted. You need a whole of market person and you may end up paying a higher percent than a high street. We were then able tp change again after the iva comes off. I think its 5 years

Go onto Rightmove and put retirement homes and shared ownership into your search criteria. There are at least a dozen flats in Hampshire for under £100k, and another half dozen in Hertfordshire.

Plenty of HAs will take non-first time buyers on a shared ownership basis in retirement complexes by the way.

How much is outstanding on the mortgage OP?

Even if the OP's parents can get a mortgage, how will they pay off all the remaining equity in the small amount of time they have left before retirement?

I definitely think you should look at what they could get with the equity have. As pointed out, there may be some shared ownership options.

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

Not being harsh, but don't put yourselves in financial jeopardy because they didn't consider this when they built up their debts.

Mouikey

I posted this upthread (older people's shared ownership) but many shared ownership units aren't reserved for FTBs anyway;

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

I came across this post as my parents are in a very similar situation. My parents also had an interest only mortgage and got them selves into large amounts of debts when I was young. My partner and I lived with them for a few years while we saved for a desposit on our own home. We paid rent when we lived there but when we bought our house this left them with a significant loss of income (similarly earning £30-40k per annum between them). They have managed to negotiate reduced payments on most of their debts and freeze the interest and are slowly paying them
off. They made the decision to sell their home last year. They have come out with £90k. My mum currently lives in her sisters box room and my dad is renting a room. Having done some research the Older persons shared ownership scheme seems the best option as paying rent on the remaining share would be much cheaper than just renting. My dad has also been in contact with a financial advisor who believes he can get them a small mortgage despite their adverse credit history. If they can get a mortgage to boost their £90k to a 75% share then they would not have to pay any rent on the remaining share (as they are over 55). Sorry for the long post but I am interested to know what they decide. SO may well be a viable option for them. I know the worry of where your parents may end up.

How about a barge or houseboat?

Uncle was in a similar position so all of his kids got together and bought him and aunt a small house on mortgage. All the kids names are on the propery along with uncle/aunt because the solicitor said you can get around inheritance tax that way.

They don't want to rent, don't want to live in a park home and don't want to move to a cheaper area. That really does limit their options. It goes to show that it isn't just younger people who want a champagne lifestyle on a lemonade budget. Living in an owner-occupied spacious house in the SE isn't an entitlement, so they may be better getting used to the idea of cutting their cloth according to their means. With their massive deposit, they are much better off than most anyway. I'm not sure why a park home wouldn't be good enough - I would assume that most of the other residents would be normal people like them who are on modest incomes.

Move to a cheaper area, or rent.

If those options are unpalatable, maybe they could find a leasehold flat with a short (