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Original poster

Equity release? We’re desperate :(

212 replies

JupiterFortified · 04/01/2023 22:54

If anyone can please offer any advice I’d be really grateful.

My dad recently passed away and my mum is left with a house with a large mortgage remaining on it.

The mortgage ends soon and we have no means with which to repay it (mum
only has state pension income).

Following dad’s death I don’t think she’d cope if she had to move out of their home :(

So we are thinking her only real option is to apply for an equity release mortgage to pay off the mortgage - does this seem like the best option?

I am lost. For what it’s worth, I’m not worried about any potential inheritance being eaten up by the interest on the equity release. I just want my mum to be able to keep her home :(

OP posts:
EmmaEmerald · 04/01/2023 22:58

Are you sure there's no insurance attached?

I wasn't allowed to get a mortgage without taking a life insurance policy to pay off the mortgage if I died. So just wondering if there's something there but it's not immediately obvious.

Lougle · 04/01/2023 23:00

My parents did equity release to stay in their home. It was quite long-winded for them. One lender refused to lend because there is an industrial estate near by. Another wanted certain conditions to be met, which could only be met by having the money released. It nearly didn't go through, but someone senior saw the file and realised how ridiculous it was to expect them to spend £x on improvements before releasing the money, when the whole point of equity release was to make those improvements.

It's not a good time for equity release right now, with interest rates. The rate doubled between my parents' initial drawdown and the money they needed for improvements.

One tip, if you do decide to go ahead, is to speak to her lender and say that she's out of options. They may then offer to refer to Age Partnership. If they refer, then AP waive their client fee. If you go direct to AP, then you have to pay the fee. It was around £2000, so well worth getting the referral via the mortgage company.

SausagePourHomme · 04/01/2023 23:00

i'd post on the moneysavingexpert forum about this, they are very knowledgable over there about personal finance stuff

Iamthewombat · 04/01/2023 23:03

Sorry for your loss. If the remaining mortgage represents a high percentage of the house’s value, you probably wouldn’t get an equity release arrangement. Truthfully, you would be better off selling the house.

PoinsettiaPosturing · 04/01/2023 23:11

If there's already a mortgage outstanding it's unlikely you'll get an equity release. While I understand the need to keep your mum in her home, maybe downsizing and moving to a long term home that she owns cash will be beneficial for her. Houses can contain a lot of 'memories' and ghosts long term - she may struggle to move on

EmmaEmerald · 04/01/2023 23:16

There's also a Money Matters board here which might be able to help you.

Gloschick · 04/01/2023 23:16

I'm confused about how they had a large mortgage if they were of pension age. Presumably it is just the fixed rate that is ending. Does your mum qualify for pension credit? If so, she could apply for support for mortgage interest payments. It would need to be paid back when the house is sold, but would definitely be worth investigating.

goldennotyetoldie · 04/01/2023 23:20

How is the mortgage being paid now?

My mum aged 80+ has been allowed to keep the mortgage by Nationwide. She renews every 5 years or so. She pays for it from her pension (which was my dads).

Shamoo · 04/01/2023 23:20

Can you share rough figures (house value and outstanding mortgage) as people may be able to help a little more then? Sorry for your loss OP.

Turmerictolly · 04/01/2023 23:23

Sounds like it is an interest only mortgage?

Schnooze · 04/01/2023 23:24

I think more details are needed. Was it an interest only mortgage or a repayment mortgage, in which case how many years are left and how much was it bought for and what’s it worth now? How much was paid off on the mortgage?

leftwingwoman · 04/01/2023 23:28

How much is the house worth?
What is the value of the total outstanding mortgage?
How old is your mother?

BradfordGirl · 04/01/2023 23:33

Someone in a similar situation took lodgers in so she could stay.

Original poster
JupiterFortified · 04/01/2023 23:35

Thank you to everyone for your replies so far, really really helpful.

To answer a few q’s:

Mum is 73.
The mortgage is interest only and it’s the actual mortgage term that ends in the next year (not just the mortgage deal).

I have no idea how or why there is still an interest only mortgage remaining :(

The house is worth circa 450k. There is around a 180k mortgage left.

OP posts:
Original poster
JupiterFortified · 04/01/2023 23:36

Sorry meant to add - now my mum will only have a small pension income.

OP posts:
Grumpycatsmum · 04/01/2023 23:37

Try to speak to a mortgage broker who specializes in equity release. Whether it is doable will depend on how much equity there is in the house and your mum's age/health. Interest rate is likely to be higher than a normal rate and is usually fixed. It can be done though. My Dad had one a s it actually worked well for him, although the rates rack up quite significantly once the amount of equity reduces (because of compound interest).

Original poster
JupiterFortified · 04/01/2023 23:37

There does not seem to be any life insurance policy as far as we can tell from direct debit payments etc.

OP posts:
LaurieFairyCake · 04/01/2023 23:38

Something else to consider - can the house be divided so she can stay in the ground floor?

I know someone who did this really successfully and paid off their mortgage selling the top 'flat' - cost under £5k to divide the title/gas and electric meters/put in a door etc.

IneedanewTV · 04/01/2023 23:38

Your parents probably assumed they would downsize to clear the interest only element of the mortgage - otherwise how did your dad assume it would be repaid.

im sorry but your mum needs to downsize. The house will be too big for her anyway and become a burden so she could downsize, gift some money and then use the rest to help her pension.

I doubt they planned to do an equity release.

Quitelikeit · 04/01/2023 23:39

It would be absolute madness to do equity release

your fathers pension - people over a certain age their pensions usually passed on to their spouses, have you looked into all of this?

did your father have a war pension?

Soontobe60 · 04/01/2023 23:39

So in reality there is £270k equity in the house. She almost certainly wont get equity release for that amount. Even if she did, how would she be able to afford to live there just on her pension?
I think the time has come for her to downsize. She could get herself a nice little apartment. Id do it asap as house prices are falling, plus the sooner she can pay off the mortgage the less she will need to pay back.

Original poster
JupiterFortified · 04/01/2023 23:41

Thankyou @Grumpycatsmum, glad it’s worked out for your dad. Had a brief chat with an advisor who (on very rough figures) thought she might (might…) be able to get equity release to cover the bulk of the existing mortgage but I guess they’d have to do a full application to know one way or the other.

This just seems like our only option and all hopes are being pinned on it. I’ve read so many horror stories about equity release it seems like a nuclear option but I think she’d rather that than sell the house.

OP posts:
Ritasueandbobtoo9 · 04/01/2023 23:42

Did your Dad have another account like a stock and shares Aida which your Mum doesn’t know about? The interest only mortgages used to insist on having some way of paying off the final amount.

Ritasueandbobtoo9 · 04/01/2023 23:42

ISA

Allsnotwell · 04/01/2023 23:43

I think you need to look at his properly.
How is it possible there is so much outstanding at her age? I doubt they would’ve lent that kind of amount as you say sue to age there’s no chance of paying it off.

Equity release will literally take all your inheritance - they charge high rates.

Can she afford to stay and pay the bills etc? I think it’s time to be practical and move out for a fresh start - a nice two bed in a retirement complex with friends all around would be a good bet.

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