Interest only mortagage with no endowment - want to move house

michaelwr

jennieshrew wrote: »

Thanks. I didnt take it too personally. Its easy for people to say !!!!!! are you doing but half the country have done what I did! I have rung my mortgage provider and they have told us they wont lend interest only on new property anyway - unless we give a 25% deposit. So we will have to go onto a repayment mortgage. About time too.

I am an accountant - its just not even funny is it! :rotfl:

Are you by any chance detailing with HSBC?

They gave me the equivalent of a financial rectal exam. Wanted to know anything of value and latest valuations. Even asked the value of my car! Then they had the cheek to say you have more assets than the mortgage needed why do I need one? Surprised they actually approved me one after I told them I was saving my ISA's for old age and overall my investments would make more than the 2.19% they were going to charge

Thrugelmir

jennieshrew wrote: »

I am an accountant - its just not even funny is it! :rotfl:

Maybe handling personal finances should be added to the exam syllabus.

selinadelvecchio

Similar situation to us in the thread earlier this week when i asked about a suitable investment vehicle for my interest only part of my mortgage i have,

People must remember these interest only mortgages were all the rage several years ago but now after the credit crunch and tightening of lending by the FSA...lenders are now needing proof of funds to pay off interest only mortgages. In some cases it is not quite so easy to swap to a full repayment mortgage depending on the original reason for taking out an interest only mortgage years ago.

However in my circumstances it was easier to stay with current lender (less hassle as i got a fixed rate to stay with current for 2 more years). Unlike this thread where the person wants to move house and due diligence is being asked by other lenders of an investment vehicle to cover i/o mortgage.

Doing my research the lenders want to see savings/ISA in place or say investment trusts/units. There are a lot out there you can look at and doing your sums for 20-25 yrs of potential growth you can extrapolate what the perceived value of an investment might be. Whether the lenders will accept this depends on their approach to risk.

Good luck.....this whole i/o mortgage thing and reviewing my own circumstances this week has been a wake up call and i thank this website for enlightening me.

mcc100

Thrugelmir wrote: »

People need to accept a share of responsibility themselves for their decisions.

Absolutely, I agree completely, and have no sympathy for those who took out IO mortgages.

However 4-5 years ago IO mortgages were being mis-sold in exactly the same way that endowments were mis-sold 15 - 20 years ago .....

spence

Sorry, but how MIS_SOLD can a mortgage be? I am 100% sure that everyone who took out an interest only mortgage whith no investment vehicle to pay it off knew they were not paying off a penny of their debt, the big clue is in the title

INTEREST ONLY!

evoke

It is extremely difficult to get interest-only mortgages at the moment. Even First Direct offset mortgages will force you into repaying them as repayment mortgages at the moment.

I think the interest-only mortgage bubble is another bubble that is about to burst. Most people who have interest-only mortgages are simply chancing their luck and have no intention of paying back the amount borrowed. They'll struggle when they try to sell up and move on to a new property.

mustrum_ridcully

spence wrote: »

Sorry, but how MIS_SOLD can a mortgage be? I am 100% sure that everyone who took out an interest only mortgage whith no investment vehicle to pay it off knew they were not paying off a penny of their debt, the big clue is in the title

INTEREST ONLY!

Indeed. The T&C of the mortgage will certainly say a repayment vehicle of some sort must be in place. Trouble is a lot of IO mortgage holders paid less attention to their mortgage T&C than they do to the instructions for their iPod.

I suspect a fair few people ignored what they were told about an IO mortgage and signed-up so that they could "get on the property ladder" and make that they didn't "miss the boat".

originalmiscellany

For my mortgage (FD) I requested an interest only mortgage and simply showed them the fact I'd overpaid the maximum of 10% for 2 years, and had savings to clear the mortgage down lower. They accepted that a few months ago which is good. However, as the theme above is saying, we've got strategies in place to pay our mortgage off, whereas it appears other people bought an interest only mortgage on the assumption/hope that house values would rise thus when being sold, a fat profit would be made.

Hope you find a suitable mortgage that works for you and allows you to pay off the full mortgage efficiently.

magpiecottage

mcc100 wrote: »

No doubt because the mortgage adviser led the borrower to believe that house prices would keep on rising forever, that they could consider it cheaper than renting, and that they could always sell for a profit ........

And equally, no doubt you have evidence to support this assertion.

Since October 2004, the FSA has insisted that ALL lenders issue a "Key Facts" document which explains the risks of an interest only mortgage and the need to ensure a suitable investment vehicle was in place at outset, then to issue warnings annually.

Prior to that, the Mortgage Code Compliance Board had imposed a similar requirement on its subscribers.

So whilst I could not say categorically that no mortgage adviser would ever make a claim, I very much doubt that most would be that foolish.

On the basis of the evidence I have seen, I think it more likely than not that whoever organised the mortgage for the OP did NOT make such a claim.

jennieshrew

indeed it was entirely my own informed decision!