Hi.
I have a problem, wondering if anyone can help me.
My father is 55 and was self-employed for over 25 years until 2 years ago. He owns a part-commercial/part-residential property mortgage free and also a house which has an outstanding mortgage of about £90,000. I took over his shop a few months ago and have been paying him £250 a week; £13000 per year. This is all the income he has at the moment and just about covers his basic living costs. There is no contract in place between us. Him being my father we saw no need for it at the time.
This is the problem I have. I recently checked his statements (he doesnt check his own, so I was not aware of this until now) and found that he is paying almost £2000 per month on his mortgage. The term remaining is about 4 years. Since he has stopped working completely he has been paying this off from savings alone. Not quite sure why he has that much in savings, but this cash pile is running out. I worked out that at this rate he will be out by this coming September.
These are the options I am considering; please let me know if I am missing something obvious.
1) Sell off the shop - tried that, but didnt work. It might be easier to sell once I have a business going, but that is not likely to happen any time soon.
2) Sell off the home, ideally my father would like to retire in that home as he spent most of his working life on it. The home value is at least £500,000, but he really doesnt want to sell.
3) Try to get a new mortgage at a reduced term. He has stopped working for over 2 years now, so he had no record of income for these years. I could sign a formal contract with him to provide proof of future income, but I am not sure how the bank will see that as we are close family members. If this will work I could probably pay him more than £250, it is not a problem for me. Also would this have to be done through a solicitor, or can I just download a sample contract and fill in the blanks. I am looking to bypass the contractual costs if I go down this route. I also have about £10,000 in savings which I have been saving up for a deposit of my own. If needed I could help pay off my fathers mortgage first. He also has a private pension worth about £15,000 which he can withdraw at 60 under the triviality rule, but that is still a few years away. I expect a mortgage requirement of £75,000 by September. Maybe an interest-only mortgage until we can sell the shop?
4) I was wondering whether the bank would let him significantly reduce the term of the mortgage to a more manageable level. The mortgage is with Halifax. Has anyone had any experience in doing so? I remember vaguely talking to a mortgage advisor about the terms, and she said that it is a lot easier to reduce the term of the mortgage (pay more) than to increase it. Another thing is his age. Being 55, if he is to reduce his mortgage amount, he wouldn't be able to fully pay it off until he is well past retirement age.
5) Let out his home and move in above the shop. Problem is we have no experience of letting, and not sure if the bank will let us. But even then I dont think the monthly rent will cover the mortgage payments.
Sorry for the long post. What would be my best option? And are there other ways forward.
Thanks in advance.
I have a problem, wondering if anyone can help me.
My father is 55 and was self-employed for over 25 years until 2 years ago. He owns a part-commercial/part-residential property mortgage free and also a house which has an outstanding mortgage of about £90,000. I took over his shop a few months ago and have been paying him £250 a week; £13000 per year. This is all the income he has at the moment and just about covers his basic living costs. There is no contract in place between us. Him being my father we saw no need for it at the time.
This is the problem I have. I recently checked his statements (he doesnt check his own, so I was not aware of this until now) and found that he is paying almost £2000 per month on his mortgage. The term remaining is about 4 years. Since he has stopped working completely he has been paying this off from savings alone. Not quite sure why he has that much in savings, but this cash pile is running out. I worked out that at this rate he will be out by this coming September.
These are the options I am considering; please let me know if I am missing something obvious.
1) Sell off the shop - tried that, but didnt work. It might be easier to sell once I have a business going, but that is not likely to happen any time soon.
2) Sell off the home, ideally my father would like to retire in that home as he spent most of his working life on it. The home value is at least £500,000, but he really doesnt want to sell.
3) Try to get a new mortgage at a reduced term. He has stopped working for over 2 years now, so he had no record of income for these years. I could sign a formal contract with him to provide proof of future income, but I am not sure how the bank will see that as we are close family members. If this will work I could probably pay him more than £250, it is not a problem for me. Also would this have to be done through a solicitor, or can I just download a sample contract and fill in the blanks. I am looking to bypass the contractual costs if I go down this route. I also have about £10,000 in savings which I have been saving up for a deposit of my own. If needed I could help pay off my fathers mortgage first. He also has a private pension worth about £15,000 which he can withdraw at 60 under the triviality rule, but that is still a few years away. I expect a mortgage requirement of £75,000 by September. Maybe an interest-only mortgage until we can sell the shop?
4) I was wondering whether the bank would let him significantly reduce the term of the mortgage to a more manageable level. The mortgage is with Halifax. Has anyone had any experience in doing so? I remember vaguely talking to a mortgage advisor about the terms, and she said that it is a lot easier to reduce the term of the mortgage (pay more) than to increase it. Another thing is his age. Being 55, if he is to reduce his mortgage amount, he wouldn't be able to fully pay it off until he is well past retirement age.
5) Let out his home and move in above the shop. Problem is we have no experience of letting, and not sure if the bank will let us. But even then I dont think the monthly rent will cover the mortgage payments.
Sorry for the long post. What would be my best option? And are there other ways forward.
Thanks in advance.