Which option would you take? Repayment or IO?

RenovationMan

Comyface wrote: »

True, true.

I think you're the exception rather than the rule, though, if you don't mind me saying.

What I mean by that is not many people would have the discipline to save the repayment money or to make overpayments to reduce the debt.

One of my friends took out an interest-only mortgage (around 2002) with the plan that she would use the bonuses she received quarterly from work to reduce the capital. I don't think she did that once. She's now in a different job with no bonuses and still on interest-only.

I totally agree with you and said as much in a different post. Everyone is different and we all have to sort our our finances according to our own circumstances and personalities. However, I don't believe that a repayment mortgage is quite the financial saviour that a lot on here seem to do. If someone is bad with money they'll find some way to screw up their finances regardless of what mortgage product they have.

CapJ

RenovationMan wrote: »

lol, you seem to know more about my application than I do. They didn't ask for a repayment vehicle at all, in writing or verbally. Period.

They would have asked how you would intended to repay your mortgage (including the capital). They have to. Period. They don't have to ask for details of the repayment vehicle, but if your broker had something ready then it would only be because you notified the lender you would repay the mortgage through a repayment vehicle. Period. How do I know this?

http://fsahandbook.info/FSA/html/handbook/MCOB/11/3

tincans

RenovationMan wrote: »

I hope that supplies you with enough information, Constable Andy.

I think you will find it is Inspector Andy to you.

sebtomato

VT82 wrote: »

A really good point. I'd not thought about that as my first house didn't have stamp duty to pay, and my next one probably won't either! It's always a good reason to haggle the price down to 249,999.99 - even on the 280k house!

Actually, you don't have to haggle below £250,000, as the stamp duty is still 1% (or 0% for FTB) at that price.

RenovationMan

CapJ wrote: »

They would have asked how you would intended to repay your mortgage (including the capital). They have to. Period. They don't have to ask for details of the repayment vehicle, but if your broker had something ready then it would only be because you notified the lender you would repay the mortgage through a repayment vehicle. Period. How do I know this?

http://fsahandbook.info/FSA/html/handbook/MCOB/11/3

I had a look at your link and the information was about ability to repay the mortgage and was in the 'Business standards' section, not 'Regulatory Processes', so perhaps these are guidelines rather than regulations?

At any rate, I'm afraid I can only say the same thing so many times, so here is my last word on the subject. They didn't ask for a repayment vehicle, perhaps they should have according to the guidelines, but they didn't. If they had I would have tried to get overpayments accepted as a repayment vehicle, if that failed I would have set up an ISA or something and then used it for emergency savings while I reverted back to direct overpayments.

Wutang_2

RenovationMan wrote: »

I'm a dedicated overpayer

Please tell all where your overpayment has come from!!

(its parents!!)

RenovationMan

Wutang wrote: »

Please tell all where your overpayment has come from!!

(its parents!!)

If you already know the answer then why ask the question? :huh:

Wutang_2

RenovationMan wrote: »

If you already know the answer then why ask the question? :huh:

Because 1.) I thought no one would be interested in reading your story and 2.) its funny that you are such a devout overpayer and havent overpaid any of your own dosh yet.

Leon_W

With regards to the FSA handbook point above re: a lenders consideration of how a customer intends to repay the mortgage.

Mortgage lenders in their desperation to maintain market share a few years ago would take practically anything as 'reasonable'. Sale of the property, inheritance, lottery win were just rubber stamped. Pure interest only (with NO repayment vehicle) WAS also an option with some lenders providing you met certain loan size and LTV criteria. From memory Nationwide would allow a pure interest only mortgage provided you had about £150k equity which would obviously allow you to downsize in future.

On the I/O v Repayment argument I have made quite a few posts over the years regarding the flexible benefits that an I/O loan has over a straight repayment. I would agree with RenovationMan on most of his points in general but would reitterate that it isn't for everyone and it does require discipline.

Anyone repaying or overpaying a very low tracking mortgage at the moment where it is not required to do so is quite mad IMO.

Regards

lee636

There’s only so much land in this country (UK), there’s only so many different types of buildings. There will always be people who want a certain type of property and always be people who can afford these (that’s life). I honestly can’t say I don’t see a certain type of place being worth more than it currently is in say 15 years (taking into account location).

Items in this world are worth what their worth for certain reasons, mostly because there are people who want and can afford them.

In 15 years time if you have someone who can afford say 500k, are they going to want a character property or some run of the mill new build? I know people will say its taste dependant but im looking at it possibly blindly from my point of view.