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.

Owing £50K isn’t a lot even at 58.
you need a lot more detail as to their income and outgoing expenses, reviewing their contributions and seeing what their pension might be.
at that age are their parents alive are they counting on inheritance income? Potentially their parents are 80, which is not that old?

Owing £50K isn’t a lot even at 58

It is when you've been paying a mortgage on the same property for over 30 years. The house didn't even cost that amount when they bought it, they should be mortgage free by now, but instead they've borrowed another £50k at least.

It’s not a lot if you can make the payments.
with housing inflation your comment about the purchase price is not relevant.

If they don't repay the mortgage, or keep up the payments, ultimately the lender will foreclose, evict them and sell it to recover the debt.

A small terrace is downsizable a 1bed flat. Studio flat. Or a mobile home.

Your Mum can check her state pension position by filling in details on the govt website

Thank you everyone, I really do appreciate the advice. My step one is to give them an old TV 😂.

No inheritance is heading their way so there’s definitely no back up plan there. I also don’t know for sure if my DF has been claiming JSA so I need to find out.

Ive had a nosy on Rightmove today and there’s a reasonable number of retirement apartments for £150k - £200k so that could be a realistic option for them.

I do despair how they’ve ended up in this position though!

I also had a look and it seems that if I do use them for childcare in a few years - they can ‘use’ these for NI contributions. Has anyone done this?

(I also went rogue and looked at combining my budget with theirs to buy a house with a granny annexe, not sure if I could actually cope living with them though….)

It's lovely that you want to help OP but they've had 30 years to learn how to budget.

Please do not give them money or move them in with you without iron clad legal assurance.

Have they asked for your help? I worry they are not giving you the full picture because they are in denial.

You can't fix their attitude to money. They habitually overspend, have done and will continue to do.
By all means have financial advice conversations with them, but don't offer any solutions where you bail them out. Never offer that.
A £50k mortgage is very affordable, my daughter pays £350 a month for hers. It's tempting to rush in rescue the ones we love, but you ae doing them any favours. They are not destitute, they still have decent choices, they just need to decide whether they want to look at any.

They’re completely in denial I think, or at least, they’ve not asked for help. I’ve just gleaned bits of information (the mortgage being the most recent that has worried me).

I think maybe I need to have a gentle word and support, but wait until they ask. My DF did go through a phase of asking me for £100 or so but I shut that down fairly quickly and he’s stopped asking.

They’re both perfectly healthy and ‘with it’ so we’re not talking frail 80 year olds. It’s just so frustrating when they should be in a great position and enjoying retirement.

OP, I am another saying Do Not Get Involved, except to advise / suggest, and maybe give them an old telly.

Especially do not pay their mortgage or accommodate them in an annexe.

You have no idea what the next few years will bring and it would be entirely reckless to give away / tie up £50k as you head towards motherhood.

Likewise say nothing about your childcare plan. Too much uncertainty. Except that they would be spending the money in advance, now.

Annexe: do you really want to become your parents landlords for maybe 40 years? What if you want to sell and move? You divorce and find that half the house equity comes nowhere near a place for you, kids, and parents? Let alone the fact that sharing a property with them would surely increase any chance of divorce.

Or be an impediment to any relationship if you are currently single.

If you enmesh your affairs with theirs they will drag you down too.

Not good, when you have kids to consider.

Are you sure they want your help OP?

And also have you talked through this “paying them for childcare” plan with them?

It could be that they have their own ideas about their finances (and their time).

It seems a little off that you are giving so much consideration to something they have not asked for your input into.

@TheFoxAndTheStar Im not sure if they do, but I think I need to have a proper conversation with them.

if they’re happy with the situation that’s fine and I’ll leave to crack on.

if they are in complete denial, and do want help, I’m more than happy to do so (more support and pointing them in the right direction, rather than monetary).

im just worried theyre so financially illiterate they don’t know what the possibilities are.

Oh and on the childcare point we’ve not had a serious convo as I don’t have any yet - but we’ve discussed in general terms and they’re happy to do a couple of days of childcare.

Look into Lifetime Equity Morgages. They are specially for over 55's and allow them to stay in the property for life or until its sold. The lender will own a right to a percentage of the property when its sold at some point down the line. If ypu google them all the info comes up

I'd be very careful with equity release. Make sure you research very thoroughly. In my job role I hear of people who have been charged extortionate interest rates on this and literally end up with nothing.

You left out a huge piece of information

Can they afford their mortgage payments? If they can, then I dont get what all the panic is about, your mum still has 9 years left before retirement, what is the end date of the mortgage?

Why on earth would they look to either move or move into these over 55 developments, they cost a fortune with extra charges for services and support, do they actually need this?

They have massive equity sitting there, they're not in negative equity and as long as they can pay their monthly mortgage its fine, if its not perhaps they could extend the period if allowed, my friend's mortgage ends when she is 75!!

For your own sake please do not get financially involved with them.
Advise, support , handhold... all great... but do not combine your finances. Whatever they decide to do.... if it goes wrong they could take you down with them...and that will have repercussions for the rest of your life!

Just be cautious with retirement flats - the service charges can be high which may not help things

@bellac11 i think the problem is they can’t really afford them. or at least, I suspect they are very much scraping by.

I need to speak to them properly and find out if they’re ok, or if they’re just burying their heads in the sand.

Im also not sure if they could even remortgage to extend the term. Their monthly income is probably about £700 on DMs wages alone if that. (I suspect their probably entitled to benefits which they also need to look into).

Can you sit down and at least do a real budget with them that spans the present and the future.

Will they let you see their bank statements?

Then you'll know a bit more and can look for suggestions.

If they rent then the rental payments will be a lot more than a mortgage, which will continue to decrease over the years.
How many years have they got left on the mortgage?

Prioritise paying that off over the next few years. They might have to use your mums income when they remortgage as she still has 9 years to retirement, so if she can increase her hours, at least until after they’ve remortgaged, then she could get a good portion of the 50k.

Childcare money could help pay the mortgage/pension.

You need to tell your dad to lower his pride and get that mortgage paid off!

On a total income of £700 they would be entitled to some Universal credit. If your dad has finished work recently and could claim new style JSA then that would likely bring them more income than UC.

Yes, a remortgage could be an option, 50k is really not that much.

I'm 55, don't earn a huge amount and am currently remortgaging my house for more than 150k on a 14 year mortgage.