Lloyds TSB blocks interest only mortgage switch

howler_2

poppy10 wrote: »

Looking worse and worse for those struggling to make their mortgage payments:


source

A very sensible move on the part of Lloyds - let's hope other lenders follow suit

MissMoneypenny

"Switching from a repayment loan to an interest-only deal, which could save a borrower with a £150,000 loan more than £200 a month, is an option that lenders can offer borrowers who are struggling to meet repayments to try to keep them in their homes."

That's £46 per week to find. Can't they they just do a weekend job or a couple of paper rounds?

adr0ck

howler wrote: »

A very sensible move on the part of Lloyds - let's hope other lenders follow suit

i fail to see why its a sensible move by Lloyds

personally i believe that if your on a repayment mortgage and you lose your job for whatever reason you should be given the option of paying interest only for upto 6 months until you get another job...............i don't see a problem with this

MissMoneypenny

Banks are not a charity. The house prices are dropping and those who took out interest only mortgages will get into negative equity quicker than those paying off the capital of the loan.

When more people lose their jobs, why should the banks take an even bigger hit when they repossess the property to try to get their money back?

adr0ck

MissMoneypenny wrote: »

Banks are not a charity. The house prices are dropping and those on interest only mortgages will get into negative equity quicker than those paying off the capital of the loan.

When more people lose their jobs, why should the banks take an even bigger hit when they repossess the property to try to get their money back?

because they will take a hit if they repossess a home but they won't take one at all if they don't

MissMoneypenny

adr0ck wrote: »

because they will take a hit if they repossess a home but they won't take one at all if they don't

The mortgage lenders might take a bigger hit if they wait too long to repossess a home.

Welfare will only help for a limited time (2 years?), that's if the country can afford it.

andys15

MissMoneypenny wrote: »

"

That's £46 per week to find. Can't they they just do a weekend job or a couple of paper rounds?

who are "they". How you can speak so flippantly about people who may find through no fault of there own in financial difficulty. You make "they" sound like dole dossing, teenagers living in council flat with 3 kids. Shame on you

kennyboy66_2

No wonder banks are so hated.

Whilst it's not a great idea for borrowers to move to interest only, I would think that a responsibe lender should at least show some flexability to borrowers whose circumstances have changed.

huntersc

Ian_Griffiths_Halifax wrote: »

I have a mortgage and I'm a Mortgage Consultant.

I am single with no dependants and have a mortgage on an Interest Only basis.

I have nobody to leave the property to if I die so why do I need to pay the mortgage off?

Due to Investment Vehicles performing very badly and having been grossly mis-sold, why should I even consider a repayment vehicle?

So long as I keep up with my mortgage payments the lender will receive their interest and when I die, they will get the proceeds of the house sale, with the balance going to my estate. If I retire and have insufficient income to pay the mortgage, which due to inflation will be a low monthly payment in 25 years time, then I could down size or rent.

I personally would say that lenders should, to protect them selves against plans such as mine going pear shaped, insist on a %age of the mortgage being on a Repayment basis. 25% should do it and not cause the payments to rise too much for customers in comparison to their interest only payments. Obviously the term of the mortgage would make an impact on the monthly payments of the repayment element.

Interest Only mortgages are a Lifeline to some people in difficult situations and I would be surprised if Lloyds TSB/C&G could enforce this as they would not be 'Treating Customers Fairly'.

I can't comment on your situation specifically, I don't have all the information at hand.

Interest only mortgages are a way for people to get themselves in a lot of bother. Let's say you lost your job or even became too ill to work. You can no longer pay the mortgage. House prices haven't risen enough to offset the money still owed, voila, you can't sell the house, you don't have enough equity for a loan, the bank aren't willing to help because you've only ever paid the interest. You're in big trouble.

The point about interest only mortgages is that they are taken out by people that are speculating on the market, who cannot afford the full mortgage.

The principle behind the interest only mortgage is exactly what we as a country need to get away from. People, for example, should not be allowed to only pay off interest on their credit cards.

If someone takes a loan then there needs to be a defined repayment period.

It pains me to think that you are a mortgage adviser and promote interest only mortgages. I do hope you only offer them in very very specific circumstances to people that have an awful lot of money because in my opinion, mortgage 'consultants' that promoted the idea of getting an interest only mortgage when someone couldn't afford a full repayment have a lot to answer for. It's simply not ethical and bad advice in most situations.

I remember my first ever mortgage, I asked about this notion of interest only and my adviser looked at me like I was an idiot. Fortunately he was being paid by my company to advise me and thus had no vested interest. He made the point very well that interest only was a way to get into a lot of trouble.

I do think that the country would be in a much more positive position right now if interest only was illegal. I believe that interest only will be seen the same way as endowments, miss-sold, badly advised and ultimately ending in repossession.

The fact that people in this country think that paying off only the interest on a loan is acceptable explains a lot about the position we are in.

MissMoneypenny

andys15 wrote: »

who are "they". How you can speak so flippantly about people who may find through no fault of there own in financial difficulty. You make "they" sound like dole dossing, teenagers living in council flat with 3 kids. Shame on you

"they" are the example in the op where they have to find another £46 per week to pay their mortgage. How did your mind deduce "dole dossing, teenagers living in a council flat with 3 kids" from that?

Isn't getting a second job for a few hours better than getting into financial difficulties?