Lloyds TSB blocks interest only mortgage switch

AMILLIONDOLLARS

MissMoneypenny wrote: »

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?

Yes they are THEY NEEDED MY HELP! As a Tax Payer I've just given them a huge chunk of money to prop them up, the least they can do in return is to spread some of MY CHARITY around!!

AMD

Ian_Griffiths_Halifax

huntersc wrote: »

I won't respond specifically to each part of your post, perhaps next time you can post properly with quotes rather than using colour.

I do wonder about your 'expertise' when your very first point is wrong, the fact that you are unaware that banks treat people who have paid capital as well as interest differently to those only paying interest is worrying to say the least.

I sincerely hope your remit is limited to pressing a few buttons and finding a mortgage because anything beyond this concerns me greatly.

The fact that you suggested an interest only mortgage to someone that could not afford to pay a repayment is ridiculous. Tempering that by suggesting it's okay because his father is a millionaire is simply bad advice but I guess your commission increases in line with the value of a property...

I really do worry when I see apparently qualified people offering bad advice to those that may not fully understand what they are getting themselves into. Fortunately I think the role of the mortgage broker is soon to end. I really do believe that brokers have a LOT to answer forpaerticularly in enabling people to borrow more than they can afford and pushing interest only mortgages without a linked fund to top up.

Hopefully this industry is torn apart and regulated properly or banks stop dealing with brokers altogether.

I responded by highlighting each point rather than the very time consuming method of splitting your long and condescending post into bite size chunks and ripping each apart.

You have your own opinion of what is and isn't good advice but what are your qualifications?

I've been in this business to know what is right for clients and have steered many people away from advice from friends and nutters who have opinions like you.

As for your comments about my earnings, well I can tell you now in my last post on this site, that I have had many debates about brokers charging fees or not charging fees, commission levels etc, and I can tell you and anybody else on here that not one of my clients in 19 years has paid me twice for arranging a mortgage and I only ever charged £750 MAXIMUM for arranging a mortgage.

The internet and forums like this give people like you a sense of power which they don't get in everyday life and it's just not worth wasting my time on here debating with such a cretin who insults me and my knowledge.

If you were in front of me now you'd be flat on your back you jumped up halfwit.

AMILLIONDOLLARS

BE NICE!!!:rotfl: :rotfl:

teabelly

There seems to be some moral argument going on against interest only mortgages. Banks aren't moral so why are we worrying about paying them back if we aren't bothered about owning the house? House price inflation is likely cover the cost of the initial mortgage and selling up and downsizing will probably lead to a straight cash purchase of another property. Repayment mortgages pay off very little in the first few years so borrowers might do better to put that money aside in a savings account for life's little emergencies than give it to their mortgage lender.

Also if you don't own your own home when you die it reduces the amount of IHT your children have to pay. The govt want you to pay it all off so they can tax you on everything you earn, everything you save then have the gall to tax you on something you have already paid through the nose via taxed income when you pass it down! Might as well not bother and stay interest only and save your kids the extra IHT bill.

There are more ways than one than a straight repayment mortgage to pay back what you owe. Money in the future is worth far less than money now so why not hang onto your current money a bit more and pay off the mortgage with future money which will be worth half what it is now in a generation's time? Seems more financially prudent in some ways than scrimping now to afford a repayment mortgage when you could just put some aside if you wanted to pay off more. Yes you save on interest charges but unless you add in what the net present value of those interest charges are it is a hard calculation to work out whether you are better off doing the straight repayment thing or waiting for 25 years and paying it all off then with future money. I wish someone could work all that out

Morals don't come into it for me. I want to know in real terms which is financially more prudent - pay it all back early, pay it over 25 years or not bother until the 25th year and sell up/ pay it off with other means.

SandC

The problem is that in the eighties and early 90s endowments were performing so well that people were able to pay their mortgage off and pocket a nice lump sum too. That was the basis on which interest only mortgages were so common.

Whilst I agree that values are a lot less after the 25 year mortgage period is up, it is probably significantly more than you might anticipate. After 13 years of paying interest only actually the amount to be settled in less than that time again at this present moment is still a fair old chunk of money and I wouldn't presume that it would be so much easier to get my hands on at the end of the term. Does that make any sense? Had I not swapped, as an example, I would still owe over £30k. I know that is peanuts to most mortgage holders but there you go - it isn't to me. £30k cash to me now doesn't feel any less than it did when I took the mortgage out 13 years ago. So would it have been easy peasy to get my hands on in 12 years time?

If people don't have to have some sort of financial plan to pay off their mortgage after 25 years, chances are they will not have one. You have to be very strong minded to not dip into savings of that nature, thinking you'll replace it after this emergency is done with (this is precisely why pensions are not accessible, see how often on the pensions board people ask if they can cash in some old plan of theirs).

If you pay interest only and eventually end up selling the property after the 25 year term because you don't have the money, doesn't the bank or lender get the house anyway? As it was never yours?

I agree completely with short term fixed periods of interest only, though this should include quarterly meetings with the lender to assess the whole financial situation and they should only allow the interest free period if they have all facts about incomings and outgoings of the borrower.

huntersc

Ian_Griffiths_Halifax wrote: »

You have your own opinion of what is and isn't good advice but what are your qualifications?

I was, until last week in risk management (equity derivatives marketplace) for the investment arm of an international bank. I have a first class honours in PPE from a fairly well known university...you can probably guess from the course. I went on to study quantitative models and proprietary trading algorithms at a well known US school. I also have FSA approved person status as well as an SII derivatives certificate.

Don't know much about history
Don't know much biology
Don't know much about a science book
Don't know much about the french I took

But I do know about banking and finance.

I've been in this business to know what is right for clients and have steered many people away from advice from friends and nutters who have opinions like you.

Perhaps I am a nutter, but I'm not advising people on interest only mortgages when they cannot afford the repayment. I stil find that incredible.

As for your comments about my earnings, well I can tell you now in my last post on this site, that I have had many debates about brokers charging fees or not charging fees, commission levels etc, and I can tell you and anybody else on here that not one of my clients in 19 years has paid me twice for arranging a mortgage and I only ever charged £750 MAXIMUM for arranging a mortgage.

I don't have any interest in whether you are paid twice or how much you earn. If you choose to charge flat or commission, well that's up to you. However I do find commssion based advice interesting. The idea that one's earnings are linked to how much their client borrows sounds like it could be a recipe for danger an fleecing! As for charging £750, crikey, that's a lot for pressing a few bttons...(kidding, kidding)

If you were in front of me now you'd be flat on your back you jumped up halfwit.

I'm sure I would be. You're very strong and tough and your dad could easily beat up my dad.

Who was it that said the moment you become aggressive or threaten the other person you've lost the argument?

huntersc

teabelly wrote: »

There seems to be some moral argument going on against interest only mortgages. Banks aren't moral so why are we worrying about paying them back if we aren't bothered about owning the house? House price inflation is likely cover the cost of the initial mortgage and selling up and downsizing will probably lead to a straight cash purchase of another property. Repayment mortgages pay off very little in the first few years so borrowers might do better to put that money aside in a savings account for life's little emergencies than give it to their mortgage lender.

Also if you don't own your own home when you die it reduces the amount of IHT your children have to pay. The govt want you to pay it all off so they can tax you on everything you earn, everything you save then have the gall to tax you on something you have already paid through the nose via taxed income when you pass it down! Might as well not bother and stay interest only and save your kids the extra IHT bill.

There are more ways than one than a straight repayment mortgage to pay back what you owe. Money in the future is worth far less than money now so why not hang onto your current money a bit more and pay off the mortgage with future money which will be worth half what it is now in a generation's time? Seems more financially prudent in some ways than scrimping now to afford a repayment mortgage when you could just put some aside if you wanted to pay off more. Yes you save on interest charges but unless you add in what the net present value of those interest charges are it is a hard calculation to work out whether you are better off doing the straight repayment thing or waiting for 25 years and paying it all off then with future money. I wish someone could work all that out

Morals don't come into it for me. I want to know in real terms which is financially more prudent - pay it all back early, pay it over 25 years or not bother until the 25th year and sell up/ pay it off with other means.

It's not so much a moral position, in my case it's about protecting the public from themselves.

You said:

"House price inflation is likely cover the cost of the initial mortgage and selling up and downsizing will probably lead to a straight cash purchase of another property."

This is exactly why these mortgages are so dangerous. It leads to speculation, it results in people making assumptions about a market of which they know very little, nevermind the external influences that can have an effect on the situation.

So what happens? People end with a house worth less than they paid for it, with no pot of money to fall back on because they assumed the HPI would cover them. They had no experience on which to base such a belief but the mortgage broker said it was okay, the bank said it was okay so they did it.

misskool

chucky wrote: »

i really hope that these people that have 50p to feed themselves and these other stories are not true as they are terrible and would not want another person to be going through this.

i also hope that this doesn't sound insensitive but my question is how do they get on the internet? they must be paying a subscription of some sort, surely this would be one of the things that you would reduce to cut your budget?

http://forums.moneysavingexpert.com/showthread.html?t=1157641
This is the 50p a day challenge thread.

BACKFRMTHEEDGE

HammersFan wrote: »

But the good news is that BoE tracker rates look like they are going to be plunging. Its not all doom and gloom out there.

Not all of them. Many Trackers have a collar/ floor which they cannot fall beneath.

BACKFRMTHEEDGE

imfedup wrote: »

Due to my circumstances I had to take on an Interest Only mortgage, this is NOT forever, this is for 2 years till I can get back on my feet. Since taking this out, I have been able to pay off my credit cards so that I now do not have 1 and will not be getting one in the future, my overdraft on my account is reducing substantially and will be nil in about 6 months (when it will be cancelled) and I am also currently paying my parents back money that they have lent me.

I am a single parent with 2 small children and recieve no maintenance. I work full time in the week, therefore working weekends (who will look after the children) or getting a paper round is not an option.

For some people an interest only mortgage can be a short term solution rather than having their house repo'd and large debts that they are unable to pay.

Once the 2 years is up I will be debt free and able to have a repayment mortgage, my intention then is to pay off more each month to make up for the 2 years that I was on an interest only mortgage as I will have no debts and having been used to being on a budget I will be able to do this. I then hope to carry this on, thus paying off my mortgage earlier.

Each to their own as everyones story is different

Good Luck with that.:T Hats off to you for your determination to survive.;)