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Original poster

Interest only mortgage at age 90

76 replies

fortheloveofgodmary · 07/05/2023 22:16

Nc for this.
I still don't know how but my retired parents took out an interest only mortgage around 20 years ago when they were in their 60s and retired. The mortgage is for £100,000. The mortgage is up/needs to be paid back in a few years when they will be 90.. There is no money available to pay it. Only one parent is still living and is on disability benefits and basic state pension with no other income.

What happens when the time comes to pay off the mortgage? It's causing a great deal of worry for my parent and I am really annoyed that they were given this mortgage with no ability to ever pay it off. I'm told the financial advisor they used fiddled the numbers to make them eligible. The mortgage lender has said to talk to them about it in a couple of years and not to worry but it's a huge worry as you can imagine.

OP posts:
mnahmnah · 07/05/2023 22:20

How much is the house worth? If it was sold, could the mortgage be paid off and enough left over to downsize?

Original poster
fortheloveofgodmary · 07/05/2023 22:24

It's worth around £300,000 but is only a one bed so there's not much to downsize to. Retirement flats were looked at but the maintenance costs made it unaffordable on the income they have and the flats aren't much cheaper.

OP posts:
PinkFootstool · 07/05/2023 22:25

Well, assuming they have no way to pay the outstanding sum of the house value, they'll need a plan to sell up and move.

If they are still paying a mortgage each month, they'll need to pay rent instead.

I assume they won't be making any money when the house is sold and the mortgage repaid?

Basically, they will have to leave their home. How's their health? Would an assisted living location be needed (at the moment) or do you need to plan for private rent?

FrownedUpon · 07/05/2023 22:26

The house will need to be sold to pay off the remaining mortgage. Did they not have a plan in place to pay off the balance? They must have realised what an interest only mortgage meant.

gogohmm · 07/05/2023 22:30

They would need to sell and rent, though if it's "in a few years" at age 90 there's a chance that they may not be requiring it by then (eg needing residential care or the obvious) £200k should be plenty at that age

NotStayingIn · 07/05/2023 22:30

Given they bought it about 20 years ago going by your post they should surely still make a profit. They need to sell and then rent with the money left over. It's not great, but if they had been renters all their lives they would probably be worse off.

BeastOfBODMAS · 07/05/2023 22:31

Equity release might be an option to pay off the existing mortgage but stay in the house. They’re not the idea solution for many situations but this might be one of them. It’s a shame they’ve fallen foul of a dishonest adviser as it’s the kind of thing you’d want advice on.

rolotops · 07/05/2023 22:32

It's possible the bank could let them increase the term.

NashvilleQueen · 07/05/2023 22:33

Bearing in mind their age would they not be better selling, settling the mortgage and renting in a nice retirement place? They're not going to be in a position to buy again and at 90 I think I'd prefer to be somewhere with some help if and when needed.

I appreciate it's not an easy conversation to have.

NeedToThinkOfOne · 07/05/2023 22:33

Assuming there is equity in the property too, with it being valued at more than what is owed, right now this should not be too much of a worry?

Also, unless you’re power of attorney for your surviving parent, the lender should not be dealing with you or discussing your parent’s mortgage details. You’d be advised to get that in place should your surviving parent no longer be able to sort their affairs.

Swishhh · 07/05/2023 22:34

Sell and then rent a sheltered housing type of place.
Possibly look at equity release if they want to stay where they are.

Original poster
fortheloveofgodmary · 07/05/2023 22:39

Thank you. My parent is now disabled and I am their carer. It's not possible for them to live with me or that would have been my suggestion first off. I think they do need to consider selling and renting somewhere but that's a lot to deal with age 90. Equity release was considered a few years but they were told they weren't eligible although I don't know why. Realistically living to 90 or beyond is not very likely I know and they shouldn't be having to worry about this at this time of life. It makes me so angry. I would hope that the bank would extend the term but I don't know how realistic that is.

OP posts:
Itcouldhappenabishop · 07/05/2023 22:43

I would investigate whether this mortgage was mis-sold to your parents. It sounds extremely dubious to me. Get onto the lender and check with the financial ombudsman.

Viviennemary · 07/05/2023 22:43

The flat will be repossessed. Or they will need to take equity release to pay off the loan. But in view of their age the lender might come up,woth a solutuion.

MarvelMrs · 07/05/2023 22:45

I wouldn’t worry too much either. Obviously the situation is not ideal but your parent won’t be homeless as they will have plenty of money left to rent or even more to a good care home at their age. The mortgage company may
also be happy to extend the terms for a few years at their age too.

MarvelMrs · 07/05/2023 22:45

*move

MarvelMrs · 07/05/2023 22:47

I would also sort the power of attorney if you don’t have it in place.

PickAChew · 07/05/2023 22:51

rolotops · 07/05/2023 22:32

It's possible the bank could let them increase the term.

And risk not getting their money back because they have very limited income and are very elderly? Nope.

Original poster
fortheloveofgodmary · 07/05/2023 22:53

Thank you. The financial ombudsman link is helpful. I'll pass that on asap.
There's no LPA in place for anything so that needs doing.
They don't need a care home at the moment as despite the physical disability they cope quite well but I'm there most days helping with housework, shopping, bills, gardening etc. In the future they might and that has been discussed to some degree.

OP posts:
Original poster
fortheloveofgodmary · 07/05/2023 22:56

@PickAChew the house is worth around £300,000 and the mortgage is £100,000 so the bank will get their money back when the house is sold upon death. I'm not sure how extending the term once someone is 90 is going to mean the bank wont get their money back?

OP posts:
2bazookas · 07/05/2023 23:12

If they don't repay , the mortgage lender will foreclose and sell the property to recover the debt. Your parents will be left with any equity as a cash sum. They can then use that sum to privately rent a retirement property that;s probabluy far better suited to their needs in old age.

tailinthejam · 07/05/2023 23:14

Itcouldhappenabishop · 07/05/2023 22:43

I would investigate whether this mortgage was mis-sold to your parents. It sounds extremely dubious to me. Get onto the lender and check with the financial ombudsman.

Good idea. This sounds like negligence on the part of the financial adviser.

YukoandHiro · 07/05/2023 23:15

If they won't move they'll have to use equity release. Not sure how that affects care fees if they eventually need to move for residential care.
You need a financial advisor.
Also I'm so sorry your parents left you handling the consequences of this ludicrous financial decision. That was really selfish of them.

2bazookas · 07/05/2023 23:15

I think they do need to consider selling and renting somewhere but that's a lot to deal with age 90

True, but there are retirement property providers who offer to do all the admin work including packing and the housemove and unpacking , for older clients who can't face the hassle.

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