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"why i plan NEVER to pay off my mortgage" discussion!

24

Comments

  • FrankieM
    FrankieM Posts: 2,454 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    So what do you think about interest only mortgages then?
    I have friends who have 3 properties ( 2 are buy2lets) and all their mortgages are interest only.
    Their view is that in x years time they will sell the properties and buy one property for themselves outright.

    I'm a little uncomfortable with the thought...but wondered what others thought cause its the same sort of thing as the guy in the article is doing, though obviously they aren't investing any money anywhere else...
  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    FrankieM wrote:
    Their view is that in x years time they will sell the properties and buy one property for themselves outright.

    ie. they're gambling on the property market

    If their btl's are being covered fully by rental incomes then it's a managed risk, but they still have absolutely no idea where they will financially be in "x" years time. I would question how they have worked out that they will be able to "buy a property outright" and what level of property and what timescales they are aiming for? (bearing in mind that they will be paying tax on the sales of the second and third properties).

    Personally it's not a risk that I'd be prepared to make with my own home.
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • surely paying off extra each month is sound investment.I know that from one overpayment a month I have been able to reduce the mortgage term by 4 months. Let's face it with interest rates low I consideer it better to reduce the mortgage term than to put this money into a LOW interest Isa.What do ya reckon folks!
    Georgiesgirl :confused: :j :happyhear :hello: :wave:
  • I often get the feeling that one day the bubble will burst on the housing market. My first house didnt go up in value for 5 years (1993-1998) but I could not afford to put any extra away. I got some inheritance and invested in the stock market in 1999 and its never recovered. If I had paid it off the mortgage I would be quids in now. There is a young girl at work who earns about 25K pa. She cant afford to buy a house ( North West) outright and is reallly struggling. I cant help feeling that there are many young people in this position and that the market will go stale as result and make property a bad investment. I could afford to up my mortgage and buy a bigger house but I have made it a priority to pay off the mortgage (50k against prop value of 180K) within 6 years. Plus I get the added bonus of not investing in an unstable market. I hope that males sense.
  • I live in london, and its just crazy to consider getting a property here as a young person. I make 26K now, expect to push that up to > 30K in september. I can probably get together about 30K for a deposit. This should put me in a good position to get on the property ladder, but nooooo, not in the UK in 2006.

    To get anything 1/2 decent round here, you need to put in at least 200K .. how crazy is that? A 170K mortgage is just unthinkable on my salary.

    I sometimes imagine what it would be like to be on a lower salary, with no savings, with lots of credit card debts; like a lot of people my age (26) have. What kind of chance do they ever have? The bubble's got to burst one day, but i've just got a nagging feeling it won't be much of a pop
  • nearlyrich
    nearlyrich Posts: 13,698 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker Hung up my suit!
    FrankieM wrote:
    So what do you think about interest only mortgages then?

    I am very uncomfortable with the idea of both interest only and offset mortgages for a lot of of people without the foresight and discipline to look to the future.

    I personally know lots of people around my age (almost mid 40's) with huge mortgage to property value ratios, no real pension provision and unsecured debt on credit cards, car loans etc. Not sure what they are expecting to live on in 20 years time or even in because an interest only mortgage is just paying rent to the mortgage providor really. It's fine for a short time, maybe a young professional with future higher earning potential but for many people the "future" is a long way off, one day it will be seen as a scandal like the endowment situation, back in the early 80's that all seemed too good to be true to me. I am pleased we took the straight repayment option and never released any equity for transient pleasures. The security of owning your home outright cannot be beaten.
    Free impartial debt advice from: National Debtline or Stepchange[/CENTER]
  • gentlepurr wrote:
    just been reading this, and thought it would make for interesting discussion on here!

    http://www.everyinvestor.co.uk/timArticles/tim_590_94_.asp?no_pop_t=1

    i do have my own thoughts, but would be interested in reading everyone elses before i taint your judgement with my own opinions!

    gentlepurr xx

    Good stimulating thread-

    Mr and Mrs Sprat come to mind-

    I have considerable empathy with this mind set-

    Go on, taint us with your opinions GP.
    I am a fee charging WoM Mortgage broker.
    I now no longer give information and opinion within the Mortgage boards, because a number of posters who, having approached me professionally, agreed my fee-which has been been made very clear at the outset, taken my advice (normally cancelling a [home visit] meeting at short notice) have then approached one of the fee-free brokers on here to arrange the very same deal I have advised.
    Whilst I totally concur with the ethos of "money saving"- abusing the goodwill of a professional who provides a quality service is taking it too far! :mad:
  • nearlyrich wrote:
    I am very uncomfortable with the idea of both interest only and offset mortgages for a lot of of people without the foresight and discipline to look to the future.
    What's wrong with an offset mortgage? We have our stooze pot offsetting and cancelling almost all interest on or mortgage and are therefore paying off only capital every month
  • DebtFree
    DebtFree Posts: 12 Forumite
    No financial advisor will advise you to pay off your mortgage early. They earn their money by selling & they don't want to wait years into the future before for you to come back to them. Only YOU get any financial gain from paying off your mortgage early. It's like expecting a car salesman to suggest you keep your current car beacause it is still working well. It won't happen.

    In his article he mentions having better access to cash fom shares than somebody who paid off their mortgage early!
    I'd like to see his face if he took cash from shares circa 2003!
    With a decent mortgage account that has overpayments paid on it, you can just
    take back the overpayments (& often more) online.

    To conclude, the article is wothless due to the site it is hosted on. That's why this site doesn't carry paid for adverts. He is earning money, nothing else.
  • tomstickland
    tomstickland Posts: 19,538 Forumite
    10,000 Posts Combo Breaker
    I skimmed through the article and thought it was 1 dimensional tosh.
    All he's saying is that there's no point in paying off the debt because you can use the debt to make you money elsewhere. It's all a gamble.
    Paying off your mortgage by overpaying should allow you to reach mortgage free status, a wonderful place to be in my opinion.

    The link also brought the wonderful tosh to my attention:
    http://www.firstplus.co.uk/index.asp?REF_ID=40711281&ts=632801105358281250
    Happy chappy
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