Overpay on Mortgage or continue paying into pension?

Thrugelmir

marklv wrote: »

I am in agreement that it is desirable to pay off a mortgage, but my point is that putting your entire financial effort into this one goal is a waste of resources. Nobody forces you to buy a house - you can always rent, as many people do on the continent. Property ownership isn't right for everyone.

Agree, but to whose benefit are 25 years mortgages? The borrower or lender?

marklv

Thrugelmir wrote: »

Agree, but to whose benefit are 25 years mortgages? The borrower or lender?

Both, because the lender earns from the interest and the borrower uses the borrowed money to purchase the house he wants. However, I do think that mortgages should be restricted to a maximum of 20 years; I aim to pay off mine in that timeframe.

Thrugelmir

marklv wrote: »

Both, because the lender earns from the interest and the borrower uses the borrowed money to purchase the house he wants. However, I do think that mortgages should be restricted to a maximum of 20 years; I aim to pay off mine in that timeframe.

A 20 year restriction is a sensible idea. As would limit the amount that one could afford to borrow and therefore cap house prices to an extent.

In my mind 25 years is only of interest to the lender. (Forgive the pun).

marklv

I agree, but the trouble is that governments are very reluctant to regulate financial services ( as we have witnessed recently, with predictable results). The limit should be to borrow 2.5 times joint salary over 20 years; that would stop this nonsense of people overstretching themselves and house prices rocketing like mad.

Thrugelmir

marklv wrote: »

I agree, but the trouble is that governments are very reluctant to regulate financial services ( as we have witnessed recently, with predictable results). The limit should be to borrow 2.5 times joint salary over 20 years; that would stop this nonsense of people overstretching themselves and house prices rocketing like mad.

There are ways of regulating mortgages without capping income multiples directly. Unfortunately the Government, and indirectly the FSA, took their eye of the ball in recent years. Letting banks lend to much. This will change in the years to come. So mortgage "rationing" will more than likely arrive by default. As funds are only finite. So lenders will spread their risk and lend less to every borrower.