MSE News: Ombudsman warning on interest-only mortgage debts

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Hundreds of thousands of homeowners with an interest-only mortgage are facing a debt crisis when their loans mature, it is feared..."

Read the full story:

Ombudsman warning on interest-only mortgage debts

michaels

Sorry but what a load of b*llocks - I wonder how many of these people there are who don't realise that 'interest only' means they are not repaying capital on their mortgage, a round number less than 1 I suspect - although no doubt it won't stop people claiming they were mis-sold.

Interest only has got to be a winner when my savings pay more than the interest rate on my mortgage, tax free in a cash isa or in my wife's name. Last year I made a profit of about 4,000 on interest received over interest paid - if instead I had paid off the mortgage I would have had nothing - what sort of fool would have a repayment mortgage?

Degenerate

There's only so far you can go to protect people from their own stupidity.

ILW

I was misled,miss sold, scammed conned and ripped off because nobody told me that an interest only mortgage was interest only. Where do I join the queue for my compo?

Wutang_2

ILW wrote: »

I was misled,miss sold, scammed conned and ripped off because nobody told me that an interest only mortgage was interest only. Where do I join the queue for my compo?

in most areas of this forum

Premier_2

I have an interest only mortgage. It clearly states on every statement:

This is an interest-only mortgage. Your mortgage payments do not include the costs of any savings plan or other investment you may have arranged to build up a lump sum to repay the amount borrowed. It is important to check regularly that your savings plan or other investment is on track to repay this mortgage at the end of the term

So does that mean part of the monthly payment I make to the lender is going towards the repayment of the original amount borrowed?

I see on every annual statement that the current balance carried forward is the same as the previous balance brought forward, so it must be repaying the loan!

I mean, look at the figures:

Capital borrowed: £100,000
Monthly payments: £50 (I got a cracking rate marginially above BoE rate for life)
Total amount payable over 25 years (at current rate) : £15,000

They don't seriously expect me to pay the remaining £85,000 on maturity do they? I wasn't made aware when I borrowed the money that they would want it all back ... They said it was interest only; I thought they only wanted the interest! :cool::rotfl:

Thrugelmir

michaels wrote: »

Sorry but what a load of b*llocks - I wonder how many of these people there are who don't realise that 'interest only' means they are not repaying capital on their mortgage, a round number less than 1 I suspect - although no doubt it won't stop people claiming they were mis-sold.

Interest only has got to be a winner when my savings pay more than the interest rate on my mortgage, tax free in a cash isa or in my wife's name. Last year I made a profit of about 4,000 on interest received over interest paid - if instead I had paid off the mortgage I would have had nothing - what sort of fool would have a repayment mortgage?

There's been more than that on this forum in the past week.

While you're a winner many aren't. Particularly those that gambled on ever increasing house prices and are approaching retirement. So have no time to reschedule their mortgage.

ILW

Thrugelmir wrote: »

There's been more than that on this forum in the past week.

While you're a winner many aren't. Particularly those that gambled on ever increasing house prices and are approaching retirement. So have no time to reschedule their mortgage.

I suppose they will now be calling themselves victims and expecting to be bailed out by others.

magpiecottage

In fact, the FSA rules require lenders to issue annual statements which spell out whether the loan is interest only and the implications - see here if you are interested.

I have dealt with one such case. The intermediary decided to rely on the fact that they would have received statements to time bar the complaint rather than fighting it - and FOS accepted the argument.

globalds

Weak pound and tax rises lift inflation to 17-month high

http://business.timesonline.co.uk/tol/business/economics/article7129544.ece


Maybe those mortgage debts will be a couple of weeks wages by the time there due to be paid off .

Thrugelmir

ILW wrote: »

I suppose they will now be calling themselves victims and expecting to be bailed out by others.

Maybe. But the problem is very real. Northern Rocks loan book (at point of nationlisation) consisted of around 35% interest only mortgages.

In 2007 around 30% of all mortgage advances were interest only.