MSE News: Ombudsman warning on interest-only mortgage debts

ILW

Looks like there may be a lot of repos in 15 years time.

Thrugelmir

ILW wrote: »

Looks like there may be a lot of repos in 15 years time.

Or poor pensioners.

SandC

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?

'Fools' who are not in the same sort of fortunate (though undoubtedly very hard worked for) financial situation as yourself. In fact, I class myself as being sensible for taking a slightly harder option of repayment in thinking of the long term instead of the short term.

Having said that I was interest only with an endowment but cashed the endowment in a few years ago, paid the money off my mortgage and then switched to repayment over the same remaining term. I now know exactly where I stand and if I hadn't paid that money off the mortgage I still don't think it would have earned a profit in interest as my mortgage amount is in most people's terms 'small'.

Wutang_2

Usually_Angry wrote: »

I'm going to steal your signature, expresses things so well

Be my guest - can you get 100% mortgages interest only via Topcashback?

RenovationMan

I've just arranged a £300k interest only mortgage at £650 per month. I have no repayment vehicle in place and was not asked for proof of one either, though I do know the implications of having an interest only mortgage and I'm quite happy to go through with mine.

Thrugelmir

RenovationMan wrote: »

I've just arranged a £300k interest only mortgage at £650 per month. I have no repayment vehicle in place and was not asked for proof of one either, though I do know the implications of having an interest only mortgage and I'm quite happy to go through with mine.

Though your sig suggests you intend repaying the capital. By "overpaying". So you have a repayment vehicle (plan).

Wutang_2

Thrugelmir wrote: »

Though your sig suggests you intend rpaying the capital.

or relying on property price increasing £150k - a lot easier than paying I find...

RenovationMan

Hi Guys, you're both right. I'm relying on a combination of overpayments and my house value increasing. I agree that I do have a plan in place, but not one that would normally be recognised by a mortgage lender. They didn't ask me to produce any proof of a repayment vehicle, that's for sure.

We're renovating a former stable that's attached to the main house and turning it into a retirement flat for my parents to live in. Hopefully it will add as much to the house as it costs to build. We're also going to be making one or two improvements that may also add value to the house. We'll find out in three years time when the mortgage deal is up and we get a valuation for another mortgage.

Thrugelmir

RenovationMan wrote: »

We're renovating a former stable that's attached to the main house and turning it into a retirement flat for my parents to live in. Hopefully it will add as much to the house as it costs to build. We're also going to be making one or two improvements that may also add value to the house. We'll find out in three years time when the mortgage deal is up and we get a valuation for another mortgage.

Sitting tenants down value property prices. Also could make remortgaging more difficult.

RenovationMan

Thrugelmir wrote: »

Sitting tenants down value property prices. Also could make remortgaging more difficult.

We won't be selling, at least not in my parent's lifetime (what a depressing thought) and we arranged this mortgage on the basis of having my parents share the house and there wasn't a problem.

There was more hassle about the age of the property (1750's), it's listed building status and its location in a conservation area than anything about mortgage affordability, tenancy status or other financial issues. Insurance was a nightmare to source.