Too ill to work and mortgage payments are mounting...
Q: My 60-year-old mum has a serious illness and will not be able to work again. She has monthly mortgage repayments of £417 and debts that I have created payment plans for, as well as paying some myself, but she still doesn't break even.
After Disability Living Allowance, state pension and pension credit, she gets just under £700 a month. The mortgage and debts comes to just over that. We've been paying half of everything, but we can't keep it up.
We are still awaiting a decision on the mortgage interest payment benefit from HM Revenue & Customs (HMRC). She owes £6,000 and I have explained to HMRC what has happened.
It sent me an expenditure form, which had a minus figure per
month on it when I returned it. It was supposed to then come back to me with a payment plan but has been quiet for months so I sent a chase-up letter last week.
She can't really have a lodger as she is not well enough and we have to plan for that always to be the situation.
Can you offer me any advice as to our options? I'm struggling to see any way out of this.
A: Frances Walker is a spokesperson for charity the Consumer Credit Counselling Service
A: You've done the right thing in seeking help. You have already done a lot of the things that I would suggest, such as creating payment plans and exploring all of the benefits and tax credits that your mother is entitled to.
What I would suggest you also do is look at how much is outstanding on the mortgage. If there are a number of mortgage payments still left to make, your mother might want to downsize her home and clear the outstanding mortgage.
If your mother is determined to stay in her home, she could consider an equity release scheme, which would allow her to release money from the property in order to pay her outstanding debts.
It may also be possible to negotiate an interest-only mortgage, but only if the property has equity in it. Once payments have been established the arrears may be capitalised into the outstanding mortgage.
You could also look into whether your mother has any pension pots she may now be able to claim.
I would need to know more about your mother's circumstances to advise on the outstanding £6,000 she owes HMRC, so I would suggest contacting a charitable organisation such as Consumer Credit Counselling Service for a full debt-counselling session.
A loan in which the borrower pays only the interest on the sum borrowed for the life of the mortgage but, at the end of the mortgage term, they still owe what they originally borrowed as this remains unchanged. The advantage of an interest-only mortgage is the monthly repayment is considerably lower than for a comparable repayment mortgage. Lenders generally insist the borrower also invests in an endowment, ISA or pension savings policy that, on maturity, is intended to pay off the capital loan.
A term to describe financial products or ‘plans’ that help older homeowners turn some of the value (equity) of their homes into cash – a lump sum, regular extra income, or sometimes both – and still live in the home. There are two main types of equity release: lifetime mortgages and home reversion plans (see separate entries for both). Whichever type you choose, you borrow money against the value of your property, on which interest is charged, and the loan is repaid when the house is sold after your death.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.