Is your lender coming after your IO mortgage?

chucky

Bullfighter wrote: »

I do have a strong wish to own a house, but an aversion to taking on debt of hundreds of thousands of pounds in the current and foreseeable economic climate.

didn't you STR?

Bullfighter

chucky wrote: »

didn't you STR?

Yes in Jan 2010.

MissMoneypenny

Chaos_A.D. wrote: »

What we have seen since is a complete removal of this process allowing people to 'extend & pretend' that they can somehow afford something that if any logic was applied, would be seen as they couldn't.

I'd suggest there are literally millions of mortgage holders who have absolutely no idea how they are going to pay back their mammoth mortgage at the end of the term. What's worse is many will have no idea that when IR's move up these people on IO mortgages will see their payments rise drastically.

And as IR rise, no chance to get a fixed interest only, mortgage. No chance of a fixed interest repayment mortgage either, if they bought on a lie to buy or their income has dropped.

Dan:_4

Bullfighter wrote: »

Yes in Jan 2010.

So you owned a house but sold it in Jan to go into renting? May I ask Why?

new_home_owner_3

MissMoneypenny wrote: »

And as IR rise, no chance to get a fixed interest only, mortgage. No chance of a fixed interest repayment mortgage either, if they bought on a lie to buy or their income has dropped.

people who lie to buy about their income will only have themselves to blame, i could never understand anyone doing this. eventually it wil catch up with them. i got two interest only mortgages last year.

Bullfighter

Dan: wrote: »

So you owned a house but sold it in Jan to go into renting? May I ask Why?

Sure, I had a house with a 85% mortgage which in my naivety in 2006 seemed like a good idea (gearing, leverage and all that).

Roll forward to 2009 and I have serious misgivings about carrying large debts in the next decade. So I sell and pocket my original deposit (after fees).

I'm now renting a similar house, at 60% per month what the interest portion of my mortgage was. I have enough money in the bank to pay rent for 5-6 years some precious metals as a hedge.

When I can buy a similar property with a 50% mortgage I might take the risk, however I believe that prices will drop to at least pre dot com bubble prices, so a full cash purchase may not be impossible.

chucky

Bullfighter wrote: »

When I can buy a similar property with a 50% mortgage I might take the risk, however I believe that prices will drop to at least pre dot com bubble prices, so a full cash purchase may not be impossible.

nuff respect - it's always good to see people stick to their principles, even if i don't agree with them.

good luck!!

RenovationMan

Generali wrote: »

I admire what you are doing. However you must be earning substantially more than average or even than many feel they can aspire to if you can afford all those insurances and still overpay to the extent you are.

It's all relative. If I earned less then I would have a smaller mortgage and smaller insurance payments. The amount of insurances required is also dependant on each persons circumstances, i.e. how secure their career is and their wife's is, what other income they may have outside their main occupation, etc.

The current overpayments I'm currently making are not from my salary, though the ones I made over the last 10 years on my previous houses were. My first home was bought when I was only a couple of years out of Uni and I anticipated having a sustained period of pay rises as my industry experience grew. The pay rises have pretty much levelled out now, but then my lifestyle outgoings levelled out years ago, so I still feel the benefit of the latter pay rises. I also continue to feel the benefit of every bonus I have ever received - all of them have gone onto the mortgage and have paid down our debt. We are reaping the benefit today of bonuses I received in the 90's. Not many in my peer group can say that, but they had holidays to Canada, the US, they had really nice cars, etc. They made their choices and I made mine and I certainly wouldnt say that mine were the right ones for everyone, they were just the right choices for my own personal goals.

MissMoneypenny

datostar wrote: »

It all started to go wrong when banks elbowed themselves into the mix, then building societies thought they could be banks as well. Ugh.

It all started going wrong when people walked away from their debts.

Generali

chucky wrote: »

of course

but the bank will should be making some sort of margin on the mortgage rate being borrowed which results in profit.

if it's on a fixed rate - their margin will be against whatever they have put on top of the tranche of money they may have purchased for that fixed rate issue.

if the borrower is on a SVR or tracker - their margin will be whatever the difference is between the Libor rates and what they're paying their savers for their rates.

You miss going on to the next biggest rate determinant, risk. Banks try incredibly hard to measure and predict risk and in many ways we're living through the consequences of banks failing to understand and measure their risks.

If people don't have a way of paying off the mortgage after xx years then the risk is increased for the bank and they'll want to charge for that.

Put it this way, the bank I work for made a profit of £3,000,000,000 approx in the first half of 2010. It would have been £4,000,0000,000 without the charge for 'risk'.