Interest only Morgage ???

confused31_2

Thrugelmir wrote: »

Good luck with your plans.

I'm afraid the credit crunch may have put paid to your house purchase scheme. Recent history is a totally different set of circumstances to prevous eras.

Ive got 55000 pound equity in it now, if houses fall another 33.3% ill break even, its all about risk, im willing to hang on to my property, until the buyers come back, it might be 5 or even 10 years but im willing to wait.

My current situation is ive got a 50,000 pound deposit and ive just had another mortgage agreed, we have just got to find another property, but i may wait until early next year before we make our move, especially now they have said house prices may fall further.

Thrugelmir

confused31 wrote: »

especially now they have said house prices may fall further.

And may not reach 2007 levels again for another 10 years........

Too much uncertainty at the moment. The house price boom has ended and the partys over. Now everyone has to settle the bill.

confused31_2

Thrugelmir wrote: »

And may not reach 2007 levels again for another 10 years........

Too much uncertainty at the moment. The house price boom has ended and the partys over. Now everyone has to settle the bill.

they may not reach 2007 levels until another 10 years, but most people keep their homes on average for 11 years, so the chances are in if you bought a house now in 10 years time it will be worth more.

Even in the last crash, house peaked in 1990 and then they crashed, but if you go 10 years from 1990 to 2000 house oprices had rose.

here take a look at this graph.

http://labs.timesonline.co.uk/blog/2009/01/27/what-property-price-bubble/

RhysH

I got interest only last October and did not need any repayment plans. Luckly mines quite flexible and i overpay into my Mortgage account and will pay whats left over in that account every 6 months from my Mortgage.

confused31_2

RhysH wrote: »

I got interest only last October and did not need any repayment plans. Luckly mines quite flexible and i overpay into my Mortgage account and will pay whats left over in that account every 6 months from my Mortgage.

I think most of them let you pay so much a year, mines 10% a year.

opinions4u

confused31 wrote: »

they may not reach 2007 levels until another 10 years, but most people keep their homes on average for 11 years, so the chances are in if you bought a house now in 10 years time it will be worth more.

Even in the last crash, house peaked in 1990 and then they crashed, but if you go 10 years from 1990 to 2000 house oprices had rose.

here take a look at this graph.

http://labs.timesonline.co.uk/blog/2009/01/27/what-property-price-bubble/

So the big question is, how will a reduction in the availability of mortgage finance affect the next 10 years?

Banks will be far less willing to rely on wholesale funding for their lending. This will stifle future growth, as will higher taxation post-recession.

So what, precisely, is going to drive future growth in house prices?

Banging all your investment eggs in to the housing basket may not be the best way to profit over the next decade.

RobertoMoir

suethedriver wrote: »

We have a house, this one is for our daughter to live in and we are hoping that as well as helping her in the shirt term , values will go up and we can have a bit of equity out of it..

That's a lot of hope that you might have noticed from very recent history is by no means a guaranteed cert. Have you considered what you will do in this plan if the value doesn't go up? (or possibly more likely, the boom and bust cycle continues and we happen to be on a "bust" part of the cycle when you need to sell?)

Thrugelmir

confused31 wrote: »

they may not reach 2007 levels until another 10 years, but most people keep their homes on average for 11 years, so the chances are in if you bought a house now in 10 years time it will be worth more.

Even in the last crash, house peaked in 1990 and then they crashed, but if you go 10 years from 1990 to 2000 house oprices had rose.

here take a look at this graph.

http://labs.timesonline.co.uk/blog/2009/01/27/what-property-price-bubble/

Looking at the graph. There is a trend between the late 80's and 2000.

Then an explosion in prices. Fuelled by cheap credit, sub prime lending, securitisation of mortgage debt, uncertified income lending, 125% mortgages, high multiple lending and interest only mortgages ( without a repayment vehicle).

So following the credit crunch. The following lenders have either gone bust or lend under totally terms; NR, Bradford Bingley, GMAC, Lehmans, Abbey, HBOS, Halifax, Birmingham & Midshires........

Like yourself between 2003 and 2007. Around 25% of all mortgages were advanced on an interest only basis. In fact 35% of NR's between 1999 and 2007 were interest only. The majority have no repayment vehicle.

40% of NR's remaining borrowers , over 200,000, are in negative equity.

Lloyds and RBS require wholesale lending from the international markets of £450 billion to maintain their loan books. So are contracting the amount they lend, which includes mortgages.

Lots more facts that suggest we are in for a long slog of debt repayment in this country. While on a personal level for many its affordable. To expect asset prices to increase is very optimistic.

Look up some graphs on ratios of average earnings to mortgages. They'll show we are still well above historic ratios. So on this as well. Prices have further to fall.

Finally a lot more people will either lose their jobs or find their income reduced due to the recession. So whilst owning a home is a good idea. Basing the decision on whether its a good investment or not. Is something that should be parked until the situation becomes clearer.

confused31_2

opinions4u wrote: »

So the big question is, how will a reduction in the availability of mortgage finance affect the next 10 years?

Banks will be far less willing to rely on wholesale funding for their lending. This will stifle future growth, as will higher taxation post-recession.

So what, precisely, is going to drive future growth in house prices?

Banging all your investment eggs in to the housing basket may not be the best way to profit over the next decade.

People said the same in the 90's, the ones who bought in the later 90's when prices where not mad, have made the biggest gains, and it will all happen again.

So what, precisely, is going to drive future growth in house prices?

all i can say is history, house prices have always rose over a ten year period and the evidence from the past is there to see, we can all says its never been this bad, but eventually it will recover.

Thrugelmir

confused31 wrote: »

People said the same in the 90's, the ones who bought in the later 90's when prices where not mad, have made the biggest gains, and it will all happen again.

So what, precisely, is going to drive future growth in house prices?

all i can say is history, house prices have always rose over a ten year period and the evidence from the past is there to see, we can all says its never been this bad, but eventually it will recover.

We first need to reach a stable plateau built upon sustainable debt levels.
More than likely house prices will stagnate. Meanwhile those with i/o mortgages will be doing little more than renting without getting any closer to home ownership.