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Debate House Prices


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Dropping like flies......

12357…11

Comments

  • Yakubu22
    Yakubu22 Posts: 640 Forumite
    500 Posts
    chucknorris wrote: »
    Ever increasing debt? how would it be increasing? surely even an interest only mortgage would stay at a constant level of debt, wouldn't it? :confused:

    Interest only mortgages are the one of the reasons we ended up like this! So I'll pay the interest on a property for x many years. And guess what I still owe (not own) 100% of the property/mortgage....
    "For those who understand, no explanation is necessary. Those who don't understand, dont matter."
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Yakubu22 wrote: »
    Interest only mortgages are the one of the reasons we ended up like this! So I'll pay the interest on a property for x many years. And guess what I still owe (not own) 100% of the property/mortgage....

    I agree interest only mortgages have been abused, and should not be for everyone, but rather a specialised product for a few people with genuine reasons.

    BUT.... 25 years on, when the house you bought for 120K and have a 100K I/O mortgage on is now worth 600K plus, you do still have a very large chunk of equity.....
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”
    -- President John F. Kennedy”
  • bernard_shaw
    bernard_shaw Posts: 267 Forumite
    mewbie wrote: »
    The only thing that needs locking in is you.

    Haha. HMcT says he was "banned" from HPC for being "right". Well, he's not banned, he's just "trolled". He could post there if he wanted.
    This status was put on him for constant repeated vulgar and foul-mouthed abuse and bullying with sexual content. So often were his posts being reported to mods for them to adjudicate on removal, that they decided something had to be done.

    The mod's on HPC have a certain threshold number of reported and removed posts beyond which action is taken. Once that threshold is reached, the poster is labelled as a troll and his posts are pre-moderated. On at least one occasion, HMcT himself reported one of his own posts and begged the moderators to remove it (and references other posters had made to it) after he'd reviewed it in the cold light of day! So, he himself contributed to the statistics which counted up to his troll status - in effect, he hastened his own exit.

    As mentioned - HMcT could post on HPC if he wanted, there's nothing to stop him. After a period of behaving himself, his "troll" status would revert to "member".
    P = MV/Q
  • Harry_Powell
    Harry_Powell Posts: 2,089 Forumite
    edited 4 September 2009 at 11:54AM
    Yakubu22 wrote: »
    Interest only mortgages are the one of the reasons we ended up like this! So I'll pay the interest on a property for x many years. And guess what I still owe (not own) 100% of the property/mortgage....

    But surely if you bought a house today with an interest only mortgage, even if you paid nothing off the capital for the 25 year term of the mortgage, inflation would serve to reduce the amount you owed, regardless?

    Imagine how much you'd pay for a house 25 years ago in 1984, and how much people's incomes have increased over that period.

    Here is a link to average house prices: http://www.mortgageguideuk.co.uk/housing/uk-house-price-index.html

    In quarter 4 1984, the average house price was £32,543. For many people in 2009, this is a year's wage. Even if they couldn't pay it off, they could arrange a very cheap repayment mortgage to pay it off, or could sell the house for £175k (or whatever the average house price is today) and trouser the difference.

    They could even use the 25% tax free lump sum from their pension plans to pay off the house. A tax efficient way to use their finances.

    I keep reading that interest only mortgages are to blame for the whole mess (whatever the mess is) but the figures just don't stand up.
    "I can hear you whisperin', children, so I know you're down there. I can feel myself gettin' awful mad. I'm out of patience, children. I'm coming to find you now." - Harry Powell, Night of the Hunter, 1955.
  • chucknorris
    chucknorris Posts: 10,795 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    HAMISH_MCTAVISH wrote: »
    I agree interest only mortgages have been abused, and should not be for everyone, but rather a specialised product for a few people with genuine reasons.

    BUT.... 25 years on, when the house you bought for 120K and have a 100K I/O mortgage on is now worth 600K plus, you do still have a very large chunk of equity.....

    You were right Hamish he doesn't understand
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • Yakubu22
    Yakubu22 Posts: 640 Forumite
    500 Posts
    HAMISH_MCTAVISH wrote: »
    I agree interest only mortgages have been abused, and should not be for everyone, but rather a specialised product for a few people with genuine reasons.

    BUT.... 25 years on, when the house you bought for 120K and have a 100K I/O mortgage on is now worth 600K plus, you do still have a very large chunk of equity.....

    Agree with you on both points.

    However you would also need to account for 25 years of IO payments - that generally aren't hugely less than a standard mortgage repayment . That 25 years of payments would be substanstial.
    Plus even if your £120k property is now worth £600k - you would still need to find £120k ( a siginificant amount for most people) to be mortgage free.
    "For those who understand, no explanation is necessary. Those who don't understand, dont matter."
  • Yakubu22
    Yakubu22 Posts: 640 Forumite
    500 Posts
    chucknorris wrote: »
    You were right Hamish he doesn't understand

    Read my post above moron
    "For those who understand, no explanation is necessary. Those who don't understand, dont matter."
  • chucknorris
    chucknorris Posts: 10,795 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Yakubu22 wrote: »
    Interest only mortgages are the one of the reasons we ended up like this! So I'll pay the interest on a property for x many years. And guess what I still owe (not own) 100% of the property/mortgage....

    All of my mortgages are interest only. I choose not to pay off the mortgages, why should I? they are very cheap loans which are not only tax dedeuctable but at the moment I am only paying just over 1% but my saving are earning about 6%
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • Yakubu22
    Yakubu22 Posts: 640 Forumite
    500 Posts
    chucknorris wrote: »
    All of my mortgages are interest only. I choose not to pay off the mortgages, why should I? they are very cheap loans which is not only tax dedeuctable but at the moment I am paying just over 1% but my saving are earning about 6%

    Then in your situation you have done the "right" for you.

    Most people (AFAIK) can't claim interest on their mortgage tax deductable AND aren't getting 6% for their savings. I believe most would rather simply reduce debt
    "For those who understand, no explanation is necessary. Those who don't understand, dont matter."
  • chucknorris
    chucknorris Posts: 10,795 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Yakubu22 wrote: »
    Read my post above moron

    I don't see the need to step down into the gutter and start insulting people that I do not even know anything about.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
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