Page 2 | Equity release? We’re desperate :(

JupiterFortified · 2023-01-04T22:54:25+00:00

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 :(

unfortunateevents · 04/01/2023 23:44

I'm afraid I agree with everyone else here, if your mum needs to get by on a state pension than living in a large house surely can't be the best idea? Was your dad also only on a state pension? What were their plans when the mortgage term came to an end – how we're they planning on remaining in the house then?

Original poster

JupiterFortified · 04/01/2023 23:44

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?

It seems he didn’t have much by way of private pension so nothing to pass on (or very little I expect) x

OP posts:

alwayscrashinginthesamecar1 · 04/01/2023 23:46

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?

If the OP's mum is 73, I very much doubt her dad will have a war pension.

Original poster

JupiterFortified · 04/01/2023 23:47

I have no idea how he intended to repay it, possibly from likely inheritance years down the line? I really don’t know. Typical of that generation she doesn’t really know anything about any of it.

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Quitelikeit · 04/01/2023 23:48

It doesn’t matter if his private pension wasn’t much his spouse can get pay outs etc depending upon the type of pension

do you know where they were expecting to get the lump sum from to pay the mortgage off?

2bazookas · 04/01/2023 23:48

How was Dad paying the mortgage? Check if his work pension carried life insurance or if his mortgage lender insisted on a LI policy.

unfortunateevents · 04/01/2023 23:48

OP can you ask your mum what the plans were for paying off the mortgage when the term ran out next year? Surely if your parents didn't have any assets they would have been preparing to sell anyway? It doesn't sound like even combined they could have stayed in the house.

Grumpycatsmum · 04/01/2023 23:49

@JupiterFortified If you're not worried about the inheritance and the house is suitable for your Mum I would say do it. Not least because if she ever goes into a care home any equity will be needed to pay for care fees. If she doesn't have any/much equity the council will pay her fees instead. I think it's really much more important for people to be happy in their twilight years than having loads of assets.

Original poster

JupiterFortified · 04/01/2023 23:49

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.

Nothing that I’ve been able to find unfortunately.

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Quitelikeit · 04/01/2023 23:49

Oops cross posted

so sad as the equity company will literally take it all

Eilan50 · 04/01/2023 23:49

Usually when people have an interest only mortgage they have an ISA or endowment or whatever to pay it off at the end. Or if not they plan to sell the house and downsize.
It would be unusual to do equity release to pay off the remaining mortgage.

Are you sure there was bolide insurance policy attached to the mortgage? We had to have one in place as s condition of our mortgage

Original poster

JupiterFortified · 04/01/2023 23:49

Quitelikeit · 04/01/2023 23:48

It doesn’t matter if his private pension wasn’t much his spouse can get pay outs etc depending upon the type of pension

do you know where they were expecting to get the lump sum from to pay the mortgage off?

Ah ok thanks, I will prioritise calling the private pension people.

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MardyMincepie · 04/01/2023 23:49

She needs to sell the house and buy something outright, to not do that would be really foolish. She will end up like my Aunt in a huge house that deteriorates around her without being able to afford to heat it properly and having miserable years there.

Tallguy101 · 04/01/2023 23:50

So you need 180k to clear the current mortgage to be replaced by a rip off equity release scheme. Kiss goodbye to any inheritance if you do that, all the equity will be gone in a few years. Your mum needs to sell up and move somewhere she can buy for cash, ideally having some cash left over to support her income. That is the cold hard reality.

Original poster

JupiterFortified · 04/01/2023 23:50

2bazookas · 04/01/2023 23:48

How was Dad paying the mortgage? Check if his work pension carried life insurance or if his mortgage lender insisted on a LI policy.

He was working, he was a bit younger than mum :( No death in service etc though.

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Original poster

JupiterFortified · 04/01/2023 23:52

unfortunateevents · 04/01/2023 23:48

OP can you ask your mum what the plans were for paying off the mortgage when the term ran out next year? Surely if your parents didn't have any assets they would have been preparing to sell anyway? It doesn't sound like even combined they could have stayed in the house.

She doesn’t know unfortunately, she left everything to him finance wise.

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Eilan50 · 04/01/2023 23:52

Sorry for typo! Life insurance not bolide insurance!

BradfordGirl · 04/01/2023 23:53

Not all private pensions have a pay out to a spouse. My fathers didn't. But it is worth checking.

PermanentTemporary · 04/01/2023 23:53

I'm afraid I also think equity release would be fairly crazy at her age and would hugely limit her options in the future.

I'd agree with posting on moneysupermarket and I also like the sound of LaurieFairyCake's idea of splitting the house to rent half of it.

But fundamentally- it's a house. I say this as a widow myself. It's only a house and selling might be painful but it won't be the end of the world.

Original poster

JupiterFortified · 04/01/2023 23:55

Eilan50 · 04/01/2023 23:49

Usually when people have an interest only mortgage they have an ISA or endowment or whatever to pay it off at the end. Or if not they plan to sell the house and downsize.
It would be unusual to do equity release to pay off the remaining mortgage.

Are you sure there was bolide insurance policy attached to the mortgage? We had to have one in place as s condition of our mortgage

I can’t find evidence of any endowment in the papers and I’m wondering if he perhaps had a life insurance policy at the time he took the mortgage out but then cancelled it later down the line? Would a mortgage company check if the insurance was still in place periodically, I’m not sure.

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CatsFreakingMeOut · 04/01/2023 23:56

The mortgage company would have asked them how they were planning to repay the interest only part - see if they have any record of what your dad said in response to that (I've been asked a couple of times over the years as my mortgage is split: some is interest only, the rest is repayment)

Did they have a mortgage advisor when they took the mortgage out?
They should have made it clear that there needed to be a lump sum payment at the end of the term.
Can you find any mortgage paperwork in your dad's stuff? That might help you.

Original poster

JupiterFortified · 04/01/2023 23:56

Tallguy101 · 04/01/2023 23:50

So you need 180k to clear the current mortgage to be replaced by a rip off equity release scheme. Kiss goodbye to any inheritance if you do that, all the equity will be gone in a few years. Your mum needs to sell up and move somewhere she can buy for cash, ideally having some cash left over to support her income. That is the cold hard reality.

God. I know that’s probably the sensible option but she’s just lost everything, I don’t want her to lose her home too. I really don’t care about the inheritance x

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Sling · 04/01/2023 23:57

I know moving house might seem impossible but I think you should consider it and see what downsizing could mean - area, type of property, pluses and minuses. You may still decide to go a head with the equity release but that's only the mortgage so sort of half the battle, what about cost of living? Care if she gets older? Is the house suitable for being 90 - it's arguably easier to move now than then?

She may not be in a position to consider it but are you? A smaller place might be a better long term answer before taking on a equity release which could make that harder thing to do long term.

Original poster

JupiterFortified · 04/01/2023 23:58

PermanentTemporary · 04/01/2023 23:53

I'm afraid I also think equity release would be fairly crazy at her age and would hugely limit her options in the future.

I'd agree with posting on moneysupermarket and I also like the sound of LaurieFairyCake's idea of splitting the house to rent half of it.

But fundamentally- it's a house. I say this as a widow myself. It's only a house and selling might be painful but it won't be the end of the world.

You’re right, I just don’t think she can take it x

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unfortunateevents · 04/01/2023 23:59

Gosh, it all sounds a bit of a mess. In the nicest possible way, it seems that your mum is financially clueless (not a criticism, lots of people of her generation and younger are!) And unless you turn up an endowment policy or some substantial assets that your mum doesn't know about, then it seems as if your dad was burying his head in the sand about how he would find £180 K when the term came to an end next year.