Wednesday, April 23, 2008

Mother Luxuriating

While some time ago, my mother had a blood pressure at its highest of 190/110, last week it dropped to perhaps 120/60. Four different blood pressure medications combined could do that to you I suppose. I, and the specialist who is treating her, conclude that her blood pressure doctor was mistaken, to say the least.

She has spent the last week, until tomorrow, resting in a local public hospital while her blood pressure and borderline diabetes is sorted out. We visited her last Sunday and she was unbelievably bright and happily held court to anyone who had the stamina. While she has been a bit bored at times, she seems quite happy to stay in hospital. But tomorrow they will discharge her.

It was a bit hard to get her admitted, but once she was, she had the best of care in our mostly wonderful public health system.

My step father is 80 years old and must still do odd jobs to supplement their pension. My mother would prefer him to stay at home, but they would really struggle without the extra few dollars.

But things are not good. Mother has heard about reverse mortgages and so there goes our inheritance. She wants, and needs really, some new weatherboards on her house, outside repainting, a new lounge suite, washing machine, bed, carpet clean, couple of light fittings and a car.

We calculated the amount to about $20,000.

I have done some research on reverse mortgages, or equity loans. Choice did some research last year and sister is going to look at it as she is a paid member. I would only feel safe with one of the big banks.

From what I calculate, she could probably have about $70,000 if she wanted, but I dare not tell her that. Her wardrobe will be full of expensive shoes again.

One serious sticking point is that it is her house, not my step fathers. He has no entitlement to it at all and if sums were done, he would owe my mother money. However, it is generally agreed by all that should my mother die before him, he would remain in the house. This would be a problem if a reverse mortgage was taken out, as once my mother died, the house would have to be sold.

I need to do more research, but any clues or experience?

17 comments:

  1. Maybe you should buy her a new pair of shoes, just to take the desire away?

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  2. If your stepfather has been with her longer than two years, I reckon he would have rights to half the house anyway. That's the way it usually works.

    So many remarriage and property issues, it's a common issue. I would check on that first with your solicitor.

    I agree with you, there are plenty of predators out there. One of the big banks is the only way to go.

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  3. Hi Andrew

    It is a toughy. I don't suppose you and/or another of her nearest and dearest could come to an equity arrangement with her. You could loan her the money in return for an equity percentage on the house? Just a thought. Best wishes to her too.

    xxx

    Pants

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  4. Don't know anything about the Australian financial system Andrew, but I'm an expert on blood pressure tablets, owning (and partaking daily) in one of the most extensive collections of them in the world.

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  5. Might be able to save your mum some $.
    Check out The Good Shepherd buying service for white goods, bed, etc here
    http://www.goodshepvic.org.au/www/385/1001127/displayarticle/1001640.html
    And for loans for 2nd hand cars check out here
    http://www.goodshepvic.org.au/www/385/1001127/displayarticle/1002414.html

    The Grey Army here
    http://www.greyarmy.com.au/index.php
    does great work much cheaper than other tradies.
    As Blisshill said your stepdad has automatic rights to half the property and (God forbid) if anything happens to your mum, he will be expected to either front up the loan money in 1 lump sum or sell the property.
    Might need to get a money whizz in to look at their finances and set a budget.

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  6. Do you remember poor old Dawn Fraser on an info-mercial for one of these reverse mortgage companies Andrew? She had some mud thrown at her when the company turned out to be shonky. There are some real rogues out there.

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  7. She tends to comfortable now really Daisy Jo.

    He could claim that in a disputed will Bliss, but I think my mother's will says that we get the house but he has the right to live there as long as he wants before it is sold. It will be horribly messy if my mother dies before my step father.

    On the ball Pants. I am trying to think along these lines, but only one of us four has any kind of money in the bank, and it ain't me.

    I am pretty up there on blood pressure meds Brian. I take two different ones.

    All great ideas Jayne, but they have pretty well cut things to the bone and step father is master at finding bargains. There would be a local community free financial counselling service. My brother is a builder he will do things for no labour cost when he has time.

    Indeed LiD. That is why I would only use a major bank one, and even then cautiously.

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  8. I hope your mum's blood pressure stays settled, I am glad her stay has been ok too.
    If she is on Novrvasc or Amilodipine I just heard some of the ingredients is in short supply out there, so make sure her discharge script allows for a big suppply of it :)
    I hear the ads for the mortgaging thing on 3aw every day and gave it some thought yesterday..not a bad idea if you never travelled and thought this is the way to get hold of some dollars...yes, inheritance gone, but, at least they enjoy their time when alive, lol.
    Re ur mum's situation, tough call... but for me, I reckon he ought to pull his weight too.. then again, he is still working. My pop fell in a heap when he ceased to work...retirement kills men more oftent han not.

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  9. Back again.

    When I moved into my partner's home and sank my money into the property, I was put onto the title and our wills were set up so the deceased partner's share was held in trust for his or her children, and the surviving one could live out their days at home. Sell up would only happen when both were gone and all our kids got their fair share.

    It's worth getting the legals right before things go pear shaped and saves the dog fight afterwards.

    Maybe he doesn't have kids?

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  10. Don't let her consider any other but St. George for any reverse mortgage. They won't lend any more than a quarter of what the house is worth (I'm doing this from memory) so there is always money left for inheritence.
    While my mother's loan is up to nearly $80,000 the house itself has risen in value way above the price at the time of the loan.
    The improvements we did have certainly made it possible for her to stay there and my sister and I agreed that it was her house and her money to do what she wanted. We just didn't know at the time how much she'd racked up on the Mastercard so that had to be paid first.

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  11. Neither of those Cazzie but one of mine is el cheapo substitute for Novrasc. Tenorman is one she takes. He puts up with my mother, that is enough and he does have outside interests too.

    Your situation sounds organised and clearly defined Bliss. Ours is much more complicated, like my grandmother lending step father quite a bit of money before she died and it has never been repaid. That is fine, my mother wore the loss eventually. I think it will work on a good will basis. His kids, nine of them, have no claim at all in moral or a legal manner and they are all pretty well set up. They were all pretty well grown up by the time my mother and step father got together. We kids recognise his right to stay in the house until he dies. The younger kids know him better as they grew up with him a bit, whereas I did not. All of us kids have been quite generous to both of them over time. Thanks heaps for your input though. It makes me think wider.

    Not sure why Jahteh, but I was thinking of St George too. I think it was the first bank to offer a home equity laon as it seems to be more nicely called. Lol at your ma racking up a card debt. Won't be her problem.

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  12. I would advise caution and highly recommend that you see a financial planner for advice. There are lots of issues that are not obvious to the non-expert - eg tax implications; mortgage insurance; term loans vs tenure loans; cost/requirement to maintain the home; closing fees when the mortgage matures; impact on welfare benefits; servicing fees; what happens if she needs/wants to move; etc. etc. It can be very confusing and you might find it difficult to work out if your mother, step-dad (and her heirs) would be overall advantaged or disadvantaged. She may be better advised to sell and downsize her living situation and invest the money to make it work for her, rather than sign away future equity value in her property to the banks. Make sure your mother is fully informed before she makes a decision.

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  13. All valid points Altissima, thanks. She has/is also considering downsizing.

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  14. research a thing called
    "Tenants In Common"

    or ask JahTeh

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  15. My partner and I are classed as 'Tenants in Common'(see above).

    I have pondered a bit since this post, and because I have a very naughty/nasty child I have cut out of my will, I have decided to have a video made of our wishes, commit it to CD and give our other children a copy along with our wills.

    No arguing with that, hopefully?

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  16. Blisshill, it might not work out that way as any close family member even if cut out can still challenge the will. They might not get anywhere but the upheaval causes a lot of grief.

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  17. I am not sure about that Ann. Now I think more about it, he used to pay board but I am not sure if he still does.

    I believe the best way to leave someone out Bliss, is to leave them a token amount and state the reasons why. Then they have clearly been recognised and your intent to not leave them anything of any note is also very clear. A planned and thought out decision.

    Am I on the money Jahteh?

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