Is your lender coming after your IO mortgage?

ninky_2

i think there is a problem with IO mortgages that don't allow overpayments (i.e. repayments) as you will end up having to pay a lot more over the long term.

however, someone like myself with a flexible IO mortgage will probably end up paying less than someone on a fixed repayment deal with high erc.

michaels

The deal quoted has a 1k fee so factor that in over 2 years on a 200k mortgage adds 0.25% to the rate - alternatively there is a tracker for life at 2.19% with a £99 fee so still a good deal less than you receive on the AA instant save Account. Or of course there is the SVR for those who would rather pay more than they have to, after all HSBC clearly need help to boost their profits.

Linton wrote: »

When I look on the HSBC website the standard rate for IO mortgages is 3.94%. I guess somewhere there may be a special offer, but the majority of your repayments wont be under those terms.

Linton

michaels wrote: »

The deal quoted has a 1k fee so factor that in over 2 years on a 200k mortgage adds 0.25% to the rate - alternatively there is a tracker for life at 2.19% with a £99 fee so still a good deal less than you receive on the AA instant save Account. Or of course there is the SVR for those who would rather pay more than they have to, after all HSBC clearly need help to boost their profits.

But you pay 20% (or more) tax on the AA account.

And perhaps more significantly:
"rates include a 12-month gross bonus of 2.30%"

Doesnt look that much of a sure shot to me. Especially once the BOE rate rises to more normal levels.

Brodiebobs

I posted a while ago about my C and G mortage and that they had contacted me trying to pressure me into going from IO to repayment (even though i was overpaying at a higher level than repayment....) .

In todays post i have received an 'illustration' of how the payments would work, burried 8 pages in was a paragraph advising they will be charging £77 "ammendment fee" if i go ahead....

call me synical but pushing customers they apparently class as a risk onto repayment and charging them for the privillage... unbelieveable!

michaels

MY wife doesn't pay tax

When the AA bonus expires (or before) there will be another best buy account along probably including a bonus to switch to, just as the mortgage will need switching. In the past 9 years I have had a mortgage the average spread between cheapest mortgage and best instant access savings account has 80 basis points with the savings paying more. Yes it takes a few hours every couple of tears to remortgage and a few minutes every year or less to switch savings but currently against a largish mortgage costing 2.5% I have an equal amount of funds in instant access accounts, either ISAs or tax free in my wife's name paying on average 4% giving me an extra couple of hundred quid a month that I wouldn't have if I paid down the mortgage instead. Based on past experience I would be very surprised if I will ever have to pay back the mortgage because the spread reverses making it unprofitable.

Linton wrote: »

But you pay 20% (or more) tax on the AA account.

And perhaps more significantly:
"rates include a 12-month gross bonus of 2.30%"

Doesnt look that much of a sure shot to me. Especially once the BOE rate rises to more normal levels.

Graham_Devon

michaels wrote: »

Based on past experience I would be very surprised if I will ever have to pay back the mortgage because the spread reverses making it unprofitable.

If you have a largish mortgage, and equal funds in savings accounts, and are saving it in your wifes name, just remember she will be liable for tax if the interest received goes over her allowance.

Any increase in interest rates makes this more possible.

Someone at work got caught out doing this, and had to pay back all the tax he hadn't paid. I only say this becaue you said largish mortgage and equal funds, which I assume, therefore, you have a large amount of savings.

nembot

new_home_owner wrote: »

posted the 2nd january 2009

https://forums.moneysavingexpert.com/discussion/comment/17221041#Comment_17221041

like the signature but by looking at your post's i dont think you know the truth yourself:o

If you did a more thorough search, maybe you'd find the post where I pulled out of the sale close to completion, rented the out the house and moved to North Wales to avoid a 2 hour+ daily drive to work

Should I have hung on and sold to buy something else, who knows and only time can answer really that question.

In the meantime I live in an area of outstanding beauty, in a spacious bungalow with landscaped gardens, front and rear (okay they need a little work, but hey - it's the country). Got brilliant neighbours and fantastic views over the fields to the front and to the rear over the Clwydian Range. Behind the border in the back garden, there's a paddock with some of the most beautiful horses I've even seen, I'll be sad when they go as the winter draws in . Amazing creatures, they come over and eat sticky buds out of your hands and watching them run around & play on a Saturday morning while cooking breakfast is just the life!

It's not all good though, one morning whilst dreaming about sheep (not my usual thing mind). Around 20 of them during the night had pushed through the fence to next doors garden, polished off a number of their fancy plants, then pushed through into the back, gave me a right suprise when I pulled back the curtains - but at least I felt better about myself

I wish i'd filmed the little'un chasing them back into the field, it was comedy gold!!!






Financially, it seems like a good move and the flexibility to move around is certainly a bonus. Few things cost a bit more, others a little less. Council tax before discount is just under £2000, from £1200. Car insurance dropped from £390 to £120. Fuel bill from £170 a month to £50. Heating oil seems a more expensive, but with no gas supply to anywhere local, not much to do about that.

So yeah, it's the country for me on my next purchase and I think we're on the verge of seeing prices fall by at least 25%. I'm no economist, but I'm not stupid and the big picture plus the apparent desperation to keep the illusion going doesn't fool me. Some may think their little shoebox is worth 175k (when the average local wage is 16k) like the lenders and estate agent said, but I certainly don't and when the party is over, they probably won't either (which isn't going to be pretty for many I'm sad to say )

It would however explain to an extent the reason for certain parties stance on house prices here, there's nothing wrong with that... it's their opinion and they're entitled to it (whether it's right or wrong) but it won't stop me saying they're talking bullucks if I think they are

So... new_home_owner, what exactly were you trying to say?

new_home_owner_3

nembot wrote: »

If you did a more thorough search, maybe you'd find the post where I pulled out of the sale close to completion, rented the out the house and moved to North Wales to avoid a 2 hour+ daily drive to work

Should I have hung on and sold to buy something else, who knows and only time can answer really that question.

In the meantime I live in an area of outstanding beauty, in a spacious bungalow with landscaped gardens, front and rear (okay they need a little work, but hey - it's the country). Got brilliant neighbours and fantastic views over the fields to the front and to the rear over the Clwydian Range. Behind the border in the back garden, there's a paddock with some of the most beautiful horses I've even seen, I'll be sad when they go as the winter draws in . Amazing creatures, they come over and eat sticky buds out of your hands and watching them run around & play on a Saturday morning while cooking breakfast is just the life!

It's not all good though, one morning whilst dreaming about sheep (not my usual thing mind). Around 20 of them during the night had pushed through the fence to next doors garden, polished off a number of their fancy plants, then pushed through into the back, gave me a right suprise when I pulled back the curtains - but at least I felt better about myself

I wish i'd filmed the little'un chasing them back into the field, it was comedy gold!!!






Financially, it seems like a good move and the flexibility to move around is certainly a bonus. Few things cost a bit more, others a little less. Council tax before discount is just under £2000, from £1200. Car insurance dropped from £390 to £120. Fuel bill from £170 a month to £50. Heating oil seems a more expensive, but with no gas supply to anywhere local, not much to do about that.

So yeah, it's the country for me on my next purchase and I think we're on the verge of seeing prices fall by at least 25%. I'm no economist, but I'm not stupid and the big picture plus the apparent desperation to keep the illusion going doesn't fool me. Some may think their little shoebox is worth 175k (when the average local wage is 16k) like the lenders and estate agent said, but I certainly don't and when the party is over, they probably won't either (which isn't going to be pretty for many I'm sad to say )

It would however explain to an extent the reason for certain parties stance on house prices here, there's nothing wrong with that... it's their opinion and they're entitled to it (whether it's right or wrong) but it won't stop me saying they're talking bullucks if I think they are

So... new_home_owner, what exactly were you trying to say?

usually when you are due for completion you have exchanged, but hey if you say you posted on here about pulling out of the sale im sure it will still be here you can always point it out?;):cool::D

new_home_owner_3

nembot wrote: »

If you did a more thorough search, maybe you'd find the post where I pulled out of the sale close to completion, rented the out the house and moved to North Wales to avoid a 2 hour+ daily drive to work

So... new_home_owner, what exactly were you trying to say?

im saying that post doesnt exist and you are full of !!!!!!. but having thought about it im sure youve been caught lying before......

i

nembot

Oh I've been caught lying, where exactly would that be Sherlock?

Let me point out the uncomfortable truth for you, you bought a crap house, for far too much and you can't handle it.

Nuff said, good luck over the next 25 years.