should erps be banned?

dunstonh

Or the ordinary person would actually be able to buy property outright and not rent it off the bank for the majority of their working life. Lending inflates property prices.

If people could buy the property outright they wouldnt need a mortgage in the first place.

They don't save you money. They are designed to tie you into a deal when a better one can be found elsewhere. Interesting the way"penalties" have been rebranded as "charges".

So, how does a deal that is cheaper than say the tracker or variable rates not save you money?

ERCs have been known as that for decades.

ninky_2

luckyfool wrote: »

Lets try not to feed the troll any more.

or let's give up because our argument isn't actually standing up.

ninky_2

dunstonh wrote: »

If people could buy the property outright they wouldnt need a mortgage in the first place.

hallelujah...now we are getting somewhere. if property price rises had indeed kept track with other goods most people would not need a mortgage in the first place.


So, how does a deal that is cheaper than say the tracker or variable rates not save you money?

because a) it prolongs the time you need to pay interest therefore costing more. it might look cheaper to the financially unaware but we all know it's not. b) if it really is the cheapest deal out there you are not going to want to swap it for another one.

ERCs have been known as that for decades.

before mortgages were 'invented' people paid cash for land and built their own homes.

dunstonh

because a) it prolongs the time you need to pay interest therefore costing more.

How does a 2 to 5 year deal prolong the term of a 25-30 year mortgage?

) if it really is the cheapest deal out there you are not going to want to swap it for another one.

Exactly. So, no need to redeem early and pay the ERC.

before mortgages were 'invented' people paid cash for land and built their own homes.

Those that could afford it. Of course, the vast majority lived in poverty.

ninky_2

dunstonh wrote: »

How does a 2 to 5 year deal prolong the term of a 25-30 year mortgage?

well it doesn't shorten it does it.



Exactly. So, no need to redeem early and pay the ERC.

so no need to impose ERPs if people wouldn't be motivated to switch.


Those that could afford it. Of course, the vast majority lived in poverty.

moneylenders mythology. anyway it's not moneylending that lifts people out of poverty as can be seen by the vast numbers of poor in the world today.

Wakey2008

Ninky is an idiot that has ideas from the middle ages. Mods should lock this thread.

ILW

ninky wrote: »

before mortgages were 'invented' people paid cash for land and built their own homes.

Only a very small fraction of the population could do this.

ninky_2

Wakey2008 wrote: »

Ninky is an idiot that has ideas from the middle ages. Mods should lock this thread.

nice to see mortgage advisors these days are aware of the requirements of a fully functioning democracy such as free speech and don't resort to personal insults when presented with ideas that don't conform to their world view.

our financial future is in safe hands people.

ninky_2

ILW wrote: »

Only a very small fraction of the population could do this.

to which centuries and territories are you referring?

SandC

Well years ago when your only option was SVR weren't there still ERPs then? It's only cos we are shifting our loans about left, right and centre, which wasn't an option not so many years ago (or it was but fairly pointless as SVRs tended to be much of a muchness) that they ever came into existence in the first place.

We can't have it all ways. Interest rate is low right now but has been very high historically in some periods (albeit short). I remember my first mortgage had a tie in period after the discounted rate of 3 years for 2 years on the SVR. My payments doubled overnight but that's what all the lenders were doing - if you wanted a 'deal' there had to be something in it for them and the tie in was that (or hefty ERP). We now have arrangement fees instead of them putting you on SVR. It's all the same thing really.

If you dont like it, save up and by a house for cash. Oh yes. 99% of the population couldn't afford to do that and still live somewhere at the same time. Even if the lenders are perhaps a little unfair at times (SVRs being so much more proportionately higher than the BoE rate right now for instance) but at the end of the day they are doing us a favour.