Parents in precarious position, what can be done?

[Mushroo]

My parents have always been terrible with money, but I assumed they’d paid the mortgage off so I just left them to it.

I’ve recently found out they’ve remortgaged so much they still owe £50k (which is more than they bought it for 30 years ago…).

They have absolutely no savings and have already spent most of my dads private pension.

My dad is out of work and thee years or so off retirement, my mum works part time on minimum wage after 20 years as a SAHM but is about 9 years off retirement. I don’t know if she’ll even get state pension but I think child benefit will help with NI?

What can they do about the mortgage? They can’t downsize as they already live in a tiny terrace. Will they lose the house?

My dad is happy to work but struggling to find anything at his age.

Get them to speak to citizens advice bureaux

Could they sell, pay off the £50k, put ALL of the rest into a pension fund, and see if they could rent in social housing?

I’m thinking that way they could still get some income from the pension, but would probably benefit more from pension-related benefits with regard to the rent.

Well, they can downsize surely. They could move to a flat, if needs be. It might be better, as the bills are likely to be smaller. How on earth did they manage to remortgage on such low incomes, or was it a while ago? Can they pay the mortgage now? They could look at equity release, but that technically would mean the house is signed over to the company, but they would be able to still live there. It’s best to speak to a financial advisor or even their bank.

Can your mum increase her hours in the job she does? Depending how much she comes out with a month, they may be entitled to a small amount of Universal credit and some reduction on their council tax maybe ? They won't get anything towards the mortgage but any little extra in benefits would help.

Be aware though that if they did claim UC, they would both be expected to look for full time work.

Well if they can't pay the mortgage (can they?) they'll have to sell and rent somewhere. The positives are that at age 55+ they'll qualify for housing association schemes for older people which generally are a lot cheaper to rent and often available quite quickly.

Your DM should check her pension entitlement on the Government Gateway. Also, if she makes sure she works sufficient hours to get her NI credits for the next 9 years, that will help boost her pension.

She needs 35 in total, so like you say, she will have earned them while she's been receiving CB (the rule now is that your child has to be under 12, but I don't know if it's previously applied to children of any age).

Are they both able to work? Has your dad actually been proactive about seeking work? Asked for help at the jobcentre/however it works these days? Lots of retailers, B&Q is the famous example, are happy to recruit older workers. Plus it's not necessarily a given that he has to retire when he reaches retirement age, plenty of people don't. Or has he tried recruitment agencies for factory/warehouse work? Plus yes, they need to apply for universal credit but will be expected to seek work, but might get help with that or become eligible for training schemes.

How much is their house worth and what is the remaining term and mortgage payment? House price growth has been so different across the country that their 'tiny terrace' could be worth anything from about £100k to £500k+. If it's the latter, could they sell up and buy outright somewhere slightly cheaper?

Or if they're open to renting, the 55+ housing association schemes sounds like it might work for them, and they'll get help with rent once their capital falls below the £16k.

Owing £50K isn’t that much. Maybe I don’t understand, how much is their monthly payment. Are they able to pay that plus living expenses?
More info is needed.

As pp said £55k isn’t that much depending on how much the house is worth. It could be paid off fairly quickly with some careful money management but your dad needs to find work any work and your mum will need to go full time.

If it's an equity loan, with interest they'll owe a lot more than 50k

They could purchase a retirement flat in a complex, these place are much cheaper than anywhere else.

they can apply to be on council housing and move into sheltered accommodation, often these place are under subscribed as it’s only for the over 55 which increases there chances of getting a place even though they would be selling up

it would mean they’d have the money from the sale, could you look after this money for them to make it last for them?

you can look with your mum to make sure she has 35 years of NI payments to qualify for full pension

Another thing to consider, especially if they sell up, is whether it is worth your DM buying added years of her state pension. If she is in good health and lives at least a few years past state pension age, this can be a very good investment as it will significantly boost her pension.

Before April next year, this can be backdated as far as 2006, after that you can only backdate for 6 years. But either way, it's likely this would only be an option if they sold their house, because they wouldn't otherwise have the money to be able to do it.

www.gov.uk/voluntary-national-insurance-contributions/deadlines

What do your parents think about their situation? Are they concerned and open to making changes to make the best of it, or are they burying their heads in the sand or unwilling to do anything?

Thank you everyone for your really good advice. I think a lot of the problem is they are completely burying their heads in the sand about it.

To answer a few questions:

• I think they still owe a lot because they were on an interest only mortgage with an edownment until mid 00s. At the time my DF was a decent earner (c.£50k) so they could borrow decent amounts when remortgaging.


• The house is about 700 square feet. So ‘downsizing’ would be to a flat.


• The house is probably worth £250k or so now.

My DH is capable of work, the problem is he won’t give up looking for professional roles in the area he worked in, but it’s a competitive sales environment and it’s just not working. I think he’s ashamed to admit that he needs to look for other types of work.

Ill also confirm with DM what her pension situation is like. I think she could maybe up her hours as well.

Some really useful tips though. I think I’ll suggest they start with working out what their actual plan is and look at over 55 type developments. Would they be eligible for social housing if they sell an have c.£200k in cash?

Alternatively, I could maybe pull together £50k over the next few years and pay it off for them, but I couldn’t afford to lose it. I assume if i did that and they needed care home fees, there wouldn’t be a way to ring fence my £50k?

Also, I’m planning on having kids in the next year or so, if I pay them for childcare I think that would also help a bit.

Thank you all so much for your help, It’s really been playing on my mind.

Your mum needs to go online and check her NI payments, it will tell her what pension she can expect. Google - Gov.UK pension.

They need a proper budget.

A fifty thousand pound mortgage isn't much. If DF can get another job at above minimum wage, even if not at his current level, and DM can up her hours then the house should in theory be saveable. Right at this moment the job market is very tight, so there's every chance of getting decent employment (possibly depending on geographic area though) if they strike now.

But, especially given the rise in energy and food bills, they'd need to put all their cards on the table, set a rigorous budget and stick to it.

You would probably need to spend a couple of days going through everything with them, including all their direct debits (I bet they're massively overpaying for insurance for example). They'd need to put the psychological work in.

payments on a 50000 mortgage should not be a lot and everything they pay over the interest will reduce their capital. So it sounds like a plan is needed and a hard look at their finances . Plus your dad needs a job. Any job and nibble away at that debt , starting asap.

You can lend them the £50k and ring fence it. You would need a solicitor and do a private mortgage repayable when they sell.

@HeritageVegetable i completely agree. They just have made poor financial decisions over a 30 year period.

I found out the other day they rent a tv. A 28 inch non smart tv. I didn’t even though that was a thing!! I have a spare TV they could have just had if I’d known.

I need to set aside some time and actually speak to them about it all. I don’t want to let say, 5 years pass and the situation to get worse.

I know our local council would not consider one of my work clients for social housing because she had more than 50k in capital/ equity from the sale of her home, but each local authority is different.
If your dad has stopped working recently he could also look at claiming contributions based JSA ( new style JSA ). he would need to have paid NI contributions in tax years 20-21 and 19-20. It would not be a lot and only runs for around 6 months but may help take the pressure off in the short term.

Oh no, I dread to think how much they've paid to rent a TV of a type that you've probably not been able to give away for about 15 years.

If that's an example of how bad they are, I'd be having a very frank conversation with them and be wanting sight of their credit files and bank statements before I lent/gave them any money, plus looking to see if there was any legal way to protect my money, eg a charge on their house.

Otherwise it sounds like they'll just get into a mess again and all your efforts (and money) will have gone into a black hole.

Is there any chance they'd use the time that they have right now to get some financial education?

Moneysaving Expert has a free financial education course they could do:

www.open.edu/openlearn/money-business/mses-academy-money/content-section-overview?active-tab=description-tab

Surely if worse comes to worse they sell the house and depending upon where they live buy again with remaining £200k.

Why is your DF not claiming unemployment benefit ? / contributions based job seekers allowance

He can apply via www.gov.uk

They can both check their individual state pension forecast on www.gov.uk too

Different situation but my mum sold her home 2 years ago as she could no longer manage the stairs/upkeep.

She moved to an over 55s council sheltered complex (literally at the end of the road she used to live on!) and loves it.
Rent is £98 pw and - I'm so happy about this -the heat is community heating so it's £8 pm! So relieved that she won't be stressed by increased energy prices!

It's a bit worrying that your parents are so uneducated re: finances. The TV for instance...on fb/local pages people often give away tvs for free!

I'd also - gently- suggest maybe the situation is worse than they may be admitting?

I'd also caution you against paying off the mortgage. It's really not your responsibility.

It would be far more use to get POAs for them both tbh....

It would be far more use to get POAs for them both tbh....

I know this might be a fair point in the circumstances, but it depends VERY much on how much help OPs parents actually want.

As a 48 year old, I hate the thought that my (now) teenagers might want to get power of attorney in just 10 years time.

If I read OP correctly, her mum is only 58! My parents are in their late 80s and still living very independently, and their finances are their own business (although they have never had any problems).

Sell and move to an area where 200k gets them a house. Lots of them about.