Financial Advice For Stressed 70 YO

[judas]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.

[w pilton hibby]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.

Having had excellent advice and assistance from them when I had to apply for PIP I would initially advise you to contact Citizens Advice.

They may be able to help you themselves or direct you to another organisation with more knowledge or experience of your type of situation.

[Ozyhibby]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.

Take out an £85k mortgage? It would need to be repayment because of your age but the interest payments should be a lot lower than on a personal loan so the difference in payments may not be as much?
You need independent financial advice though and I would suggest speaking to one ASAP.


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[James310]

https://www.stepchange.org/

Call these guys today. They are a charity so will do all they can to help.

[easty]

Take out an £85k mortgage? It would need to be repayment because of your age but the interest payments should be a lot lower than on a personal loan so the difference in payments may not be as much?
You need independent financial advice though and I would suggest speaking to one ASAP.

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Easier said than done. It’d have to be a shorter term mortgage, due to age. Also, the affordability calculations used by mortgage providers don’t always take into consideration that you’ll pay off the existing debt with the new finance.

It’s a really difficult one, but I think the OPs children would probably rather they had a father who wasn’t stressing about money, than a dad who was more concerned about leaving them an inheritance. The equity is there. At least that option exists.

[Ozyhibby]

Is it possible for the kids to take on the debt and the property?


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[Lee Marvin]

I agree that you should contact citizens advice. However, as above post states, it may be possible for your children to take the debt on an interest only basis if the only reason the bank wont let you is your age.

You (they) would need to have a long term strategy to pay off this debt though as you are essentially kicking the can down the road whilst paying interest in the process. It really depends on what the interest only rate is too!

Equity release is quite expensive (fees to set it up) but it may be the best option if this is the only asset available, depending on exact situation of course. It also may be the cheapest/best option in the long run for the beneficiaries of your estate (children).

Speaking to citizens advice mate, there are options.

[lord bunberry]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.
You can get something called a DAS(debt arrangement scheme i think) that will stop all your interest and they’ll spread the payments over 12 years. If your loan is secured on your house I don’t think that will be possible though. I don’t know how much you’re paying now, but a DAS would cost you £590 a month roughly.

[Stick]

Contact Martin Lewis, he loves this sort of problem and may be willing to help. Sounds like you were given bad advice in the first place.

[Danderhall Hibs]

Take out an £85k mortgage? It would need to be repayment because of your age but the interest payments should be a lot lower than on a personal loan so the difference in payments may not be as much?
You need independent financial advice though and I would suggest speaking to one ASAP.


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You’d be struggling to get a mortgage for a 70 yo as well.

As much as you (the OP) want the kids to get an inheritance it’s likely it’ll have to suffer in some way here.

You might also struggle to get an IFA for this - they’re unlikely to take a client like this on (I’m assuming you don’t have a big pension pot). Citizens advice would probably be the best starting point.

Were you advised to take an interest-only loan out or did you do it yourself?

[Santa Cruz]

I'm always a bit wary when someone tells me something they've done, but I have heard that you can sell your property for any price. Could you sell your house to family you wish to inherit it for a £1 (they take on the legal costs), rent (in the hope you are entitled to Housing benefit) and keep up the repayment loans? Maybe something to ask Citizens Advice.

https://www.webuyanyhouse.co.uk/blog/can-i-sell-my-house-to-my-son-for-1-110903/

[Peevemor]

Easier said than done. It’d have to be a shorter term mortgage, due to age. Also, the affordability calculations used by mortgage providers don’t always take into consideration that you’ll pay off the existing debt with the new finance.

It’s a really difficult one, but I think the OPs children would probably rather they had a father who wasn’t stressing about money, than a dad who was more concerned about leaving them an inheritance. The equity is there. At least that option exists.

I agree.

In any case the outstanding £85k will have to be settled eventually. I'd definitely advise getting it paid one way or another ASAP (as opposed to leaving the debt) meaning everyone is cool and knows exactly where they stand.

I'm sure the family will agree.

[CropleyWasGod]

I'm always a bit wary when someone tells me something they've done, but I have heard that you can sell your property for any price. Could you sell your house to family you wish to inherit it for a £1 (they take on the legal costs), rent (in the hope you are entitled to Housing benefit) and keep up the repayment loans? Maybe something to ask Citizens Advice.

https://www.webuyanyhouse.co.uk/blog/can-i-sell-my-house-to-my-son-for-1-110903/

You can, but any sale to a connected person is deemed to be at market value, for tax purposes.

[Santa Cruz]

You can, but any sale to a connected person is deemed to be at market value, for tax purposes.

and that's why I'm wary when I hear stories. :aok: The link sort of intimated it was possible, but without knowing much that's why I suggested checking with CAB.

[Hibs4185]

You can, but any sale to a connected person is deemed to be at market value, for tax purposes.

Could gift the house?

[greenlex]

Look into a retirement interest only mortgage. You only pay interest until there is a life changing event. This would obviously be death or having to go into a residential care home or the likes. The capital is then paid off with the sale of the house. Probably much like you thought you could do with the original loan. There’s a few building society’s do them. Best of luck.

[Danderhall Hibs]

Could gift the house?

You’ve got to be careful with this as well - there’s a thing called deliberate deprivation of assets.

[CropleyWasGod]

Could gift the house?

It still gets treated as being at MV, for tax purposes.

[Onceinawhile]

You can, but any sale to a connected person is deemed to be at market value, for tax purposes.

Whilst that's definitely true, surely private residence relief will apply? Hopefully on the full amount? But then you're into gwrob issues I suppose.

[CropleyWasGod]

Whilst that's definitely true, surely private residence relief will apply? Hopefully on the full amount?

There may be an Inheritance Tax issue as well. As well as a CGT issue for whoever the house goes to.

Without knowing the circumstances of all parties, it's impossible to give complete advice. Which is why seeking professional help is important.

[wookie70]

I'd definitely speak to your kids and then seek some professional advise. Mortgages are much cheaper than loans and if one of your aims is to give them an inheritance that might make lots of sense then taking all or some ownership in the property and them you paying them what you have been paying for interest only or similar. Sounds like tax could be an issue with that though going by the experts here

[stu in nottingham]

https://www.stepchange.org/

Call these guys today. They are a charity so will do all they can to help.

I can thoroughly endorse the above advice. Standard practice for me is to signpost people with gambling debts to either StepChange and CAB who will help you similarly. Also National Debtline, another debt charity: https://nationaldebtline.org/

All these organisations will offer you the various options available to you.

[gbhibby]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.
I would get some advice on this from citizens advice and debt help charities.
The loan you took out was probably not the best product for you at the time especially interest only loans. Did the bank ask for security over your property?
At the time of taking out your loan the banks were not behaving as they should. You should dig out all your paperwork and check out the terms and conditions of your loan. I would be very surprised if your loan was unsecured.
Please make sure that you have all the paperwork as that is crucial. Since the crash banks have more of a duty of care to customers.
You could have a case for going to banking ombudsman.
Have you considered downsizing if that's an option.
Equity release is compound interest so that depending on Interest rates £85k can become £100k in just a few years.

[HH81]

I can thoroughly endorse the above advice. Standard practice for me is to signpost people with gambling debts to either StepChange and CAB who will help you similarly. Also National Debtline, another debt charity: https://nationaldebtline.org/

All these organisations will offer you the various options available to you.

The only issue with stepchange is they usually advise you to go down the default and long term repayment plan route which would affect their credit file.

I reckon I would raise a complaint about the loan to be fair as feels like there must have been some poor advice along the way. Then look at an ombudsman if can't resolve.

[matty_f]

It still gets treated as being at MV, for tax purposes.

Would putting the house in trust be an option?

[gbhibby]

I had to take out a loan to re-pay a bad debt back in 2008.

I have been paying the loan on an interest only basis (because that's I all I could afford), but occasionally reducing it with some capital sums.

The amount was £100k, but I have whittled it down to about £85k over the years.

Now the bank is telling me that I can no longer take the loan on an interest only basis due to the fact I am now 70 yo.

I have a humble house which is paid off, but I do not want to do equity release on it because I view those deals as bad value. I do not want to leave the kids with no assets, I would rather leave the house and the balance of the loan.

Can anyone make any suggestions as I am finding this quite stressful.
Further to my previous response was the loan secured against your property, what was the term of the loan? Were you advised to take out term assurance to cover the loan? Or did you have enough cover?
Please check the small print in your loan agreement.

[Newry Hibs]

You’d be struggling to get a mortgage for a 70 yo as well.

As much as you (the OP) want the kids to get an inheritance it’s likely it’ll have to suffer in some way here.

You might also struggle to get an IFA for this - they’re unlikely to take a client like this on (I’m assuming you don’t have a big pension pot). Citizens advice would probably be the best starting point.

Were you advised to take an interest-only loan out or did you do it yourself?

How come? (Genuine question). Surely they just give advice and would be paid for it. May only be one quick meeting.

[Danderhall Hibs]

How come? (Genuine question). Surely they just give advice and would be paid for it. May only be one quick meeting.

To be brutally honest there’s not really much in it for them. Their business model will likely be based around planning medium to long term which means ongoing fees - this is the opposite of that.

Then try and balance the risk of advice given coming back to bite them in the future for a couple of hundred quid - you only need to look at the posts in here to see that folks first reaction is to look to blame someone else for this loan being taken out to see what’s ahead.

[Newry Hibs]

To be brutally honest there’s not really much in it for them. Their business model will likely be based around planning medium to long term which means ongoing fees - this is the opposite of that.

Then try and balance the risk of advice given coming back to bite them in the future for a couple of hundred quid - you only need to look at the posts in here to see that folks first reaction is to look to blame someone else for this loan being taken out to see what’s ahead.

Thanks for that. Good points.

I did wonder if IFA's took the view that they may not get repeat business so charged a fee rather than tied agents who get commission. But I see your point that if one has a bit of cash, the advice might be ongoing.

[Andy74]

To be brutally honest there’s not really much in it for them. Their business model will likely be based around planning medium to long term which means ongoing fees - this is the opposite of that.

Then try and balance the risk of advice given coming back to bite them in the future for a couple of hundred quid - you only need to look at the posts in here to see that folks first reaction is to look to blame someone else for this loan being taken out to see what’s ahead.

Agree and don't think at this point going down the route of seeking any advice on it not being sold properly etc is going to fruitful.

I'm sorry I'm going to be more blunt here than some of the responses but I think this is past the stage where the equity release type products should be dismissed as 'bad value'. £85k remaining at a point beyond retirement is a significant sum. The interest only approach has certainly been kicking this one down the road. I'm not sure further kicking is the answer now.

I get the desire to hand some assets as an inheritance but it is unfortunately a false position looking at the ability to hand that asset over - it will always have the balance of that loan stacked against it.

My parents were in a position which was not quite the same but has the same end result. They both had to end working early and had very little pension provision and no real savings. They did an equity release to give them some certainty that they continue to have what they need and have the odd holiday here and there. It means that us kids will get next to nothing from them but that matters very little. The fact our parents have been able to live the last few years and what remains of the next few without worrying about money is the main thing.

Again, apologies to the original poster for being a bit blunt with it but it is a significant sum, there is an asset and really the best thing to do is try and address it now. End result is all about the balance of the asset and debt that would be left in any case.

[gbhibby]

Agree and don't think at this point going down the route of seeking any advice on it not being sold properly etc is going to fruitful.

I'm sorry I'm going to be more blunt here than some of the responses but I think this is past the stage where the equity release type products should be dismissed as 'bad value'. £85k remaining at a point beyond retirement is a significant sum. The interest only approach has certainly been kicking this one down the road. I'm not sure further kicking is the answer now.

I get the desire to hand some assets as an inheritance but it is unfortunately a false position looking at the ability to hand that asset over - it will always have the balance of that loan stacked against it.

My parents were in a position which was not quite the same but has the same end result. They both had to end working early and had very little pension provision and no real savings. They did an equity release to give them some certainty that they continue to have what they need and have the odd holiday here and there. It means that us kids will get next to nothing from them but that matters very little. The fact our parents have been able to live the last few years and what remains of the next few without worrying about money is the main thing.

Again, apologies to the original poster for being a bit blunt with it but it is a significant sum, there is an asset and really the best thing to do is try and address it now. End result is all about the balance of the asset and debt that would be left in any case.
You are correct that the issue has to be addressed the OP is still paying out interest on the £85k has to be addressed.
Downsizing is usually the first on the list to address the situation.
I would imagine that at 70 even the interest is a significant drain on his resources.
He should check how much his current market price of his property as it will have increased in value in the 13 years since he took out the loan.
At 70 you want to minimise your outgoings. Unfortunately the family will have to accept that estate is going to take a hit.

Hope you get a good solution.

[WhileTheChief..]

Would putting the house in trust be an option?

You’re still giving the house away, just to ‘someone’ else, the trust.

[WhileTheChief..]

Thanks for that. Good points.

I did wonder if IFA's took the view that they may not get repeat business so charged a fee rather than tied agents who get commission. But I see your point that if one has a bit of cash, the advice might be ongoing.

Tied agents / commission is a thing of the past.

All adviser fees around regulated pensions are paid by the client.

[gbhibby]

Wonder how the OP is doing. Been lots of good advice. Horrible position to be in at 70yo.

[BSEJVT]

Awful position for the OP to be in

I have no doubt the debt is secured so in any circumstance children will get value - debt and costs

Lender has decided status quo can’t continue, that is interest only payments so action needs taken

Whether that action is Equity Release to repay debt or sale of property and downsizing matters little to end result other than cost differential.

If it were my dad it would depend on :

1 whether he wanted to stay in property

2 whether alternate property could be bought with net proceeds of sale

If answer to 1 was yes choices appear to be Equity Release or family buying the house from dad and repaying debt through mortgage or cash

What isn’t clear is if dad has excess income once debt is out the way through interest savings, if that is the case he could build back inheritance to children through saving all/parts of that

I am with Andy in that decisions need to be made now as all that has happened in last few years is that inheritance has been eroded by interest payments (albeit that could have been offset by rise in property value)

One thing is for sure it is a bad situation for the OP which is causing them some angst and I am sure his children would forego inheritance for his happiness

Issue maybe that they are unaware of situation and OP doesn’t want to tell them. IMO it is way too late in the day not to.

[Danderhall Hibs]

Any update on this? Hope you’ve managed to sort yourself out.

[Bristolhibby]

I'm always a bit wary when someone tells me something they've done, but I have heard that you can sell your property for any price. Could you sell your house to family you wish to inherit it for a £1 (they take on the legal costs), rent (in the hope you are entitled to Housing benefit) and keep up the repayment loans? Maybe something to ask Citizens Advice.

https://www.webuyanyhouse.co.uk/blog/can-i-sell-my-house-to-my-son-for-1-110903/

I was thinking that, but didn’t know if you could do it or not.

Sell the house to your kids for a pound. Write up a rental agreement that ensures perpetual rental as long as you are alive. Then declare bankruptcy.

But I would definitely get legal advice.

J