Posted on 12 May 2011 by Fiona
I need to raise £50k from my home to pay off a loan/ debt of my daughters. We are being threatened with court action as I had to be guarantor. My house is owned outright, but my income has been on illness benefits for some time and I am now a pensioner getting pension credit and council tax benefit. I do not want to do equity release as I want to leave her something on my death and also want some freedom/options left - can I raise a mortgage instead? My income is about £7k a year. My daughter could afford to pay some or all the monthly repayments, but cannot be considered as a mortgagee due to her credit rating. I believe my credit rating is good.
Any advice please ???
Both a standard residential and equity release mortgage are secured on your property and will be repaid from your estate should you die whilst the debt is outstanding. I do not think that you will be able to raise £50k by way of a standard mortgage because of your income and how it is derived and I do not think that it would be possible or a good idea to try and obtain an unsecured loan.
With the threat of court action, both you and your daughter need to professional debt counselling, if it is an unsecured loan that is in default they can not repossess your property and would it be wise to substitute this debt for a secured loan which if unpaid could result in the loss of your home?
You can get free and independent advice from the agencies below:
Citizens Advice Bureau
The Citizens Advice Bureau helps you to deal with any legal, money, welfare benefit issues or other problems. To speak to someone face-to-face visit your nearest Citizens Advice Bureau (details at www.citizensadvice.org.uk). If you can, try and book an appointment before visiting.
National Debt Line
National Debt Line is an independent charity that helps you to deal with debt problems. Phone 0808 808 4000 or visit www.nationaldebtline.co.uk
Shelter is a charity that offers you help with housing, mortgage debt or problems with welfare benefits. Phone the free mortgage helpline on 0300 3300515 from 8am to 8pm Monday to Friday (incl Bank Holidays) and 8am to 5pm on Saturdays to Sundays (some mobile phone networks may charge for calls to this number). Or, you can visit http://www.shelter.org.uk/adviceonline
Consumer Credit Counselling Service
The CCCS is a registered charity offering free, confidential advice and support to anyone worried about debt. Phone 0800 138 1111 or visit www.cccs.co.uk
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.