UKs biggest lender ends IO mortgages without evidence.

DervProf

RenovationMan wrote: »

Lets not have any of the "Economy Board theoretical examples to suit my argument", why not do the sums on a real-world example - My mortgage. The figures are there in my signature?

I am using a 25 year mortgage in this example. If your mortgage is over a shorter period of time, then the figure will be different, but the principal still stands.

Your mortgage at start £300,995.

Payments on IO, based on 2% IR = £501.66 per month.

After 1 year, your payements on the interest are £501.66 per month.


Today (let's say 1 year later), you owe £270,000.

Payments on IO, based on 2% IR will be £450 per month.

Now things get a bit "messy" because there is more than one way to discuss the repayment mortgage. If we simply assume that you switch to repayment today, that means you have a £270K mortgage for 24 years, in which case the interest component will be £436.48. If you had started out with a repayment mortgage, and made the £30,995 overpayment you would owe ~ £40K less (£31K op + £9K capital repayments made). Therefore, today you would owe ~ £260K if you had been on a repayment scheme. Either way, as time goes by, the interest component of a repayment mortgage reduces every time you make a normal monthly payment. Any overpayment will reduce the capital more quickly, so therefore reduce the interest component more rapidly.

DervProf

RenovationMan wrote: »

Sorry NGD, DervProf's vast ego makes him think he owns the forums and that everything else pails into insignificance next to his posts. He is about to make a fool of himself shortly by 'changing the goal posts' and discussing interest only mortgages in general, when he actually is trying to refute something I said about MY mortgage in particular.

Sorry about this, and sorry to everyone else who is having to wade through all this boring drivel on this thread. DervProf is one of those silly people who thinks winning an argument means you are 'the last one standing'. It doesn't, it just means everyone else has gotten bored and doesnt care anymore. I'm fast reaching that stage. :rotfl:

My comment to NDG was supposed to be slightly humorous, I apologise if it was taken in any other way.

I'm sure we don't need to apologise to everyone having to "wade through" this thread. No one is forcing them to, and a few may actually enjoy us having our little "debate". Come on man, I'm enjoying it. Let's try and get to a conclusion.

DervProf

wotsthat wrote: »

I can see the wider technical point in that if mortgage debt doesn't reduce or increases then interest rate rises will affect those with the highest debt more.

That is the point I am making, and it was precisely what I questioned RM on in the first place. We are trying to come to agreement on this matter.

System

Derv, why are you going out of your way to be patronising and rude?

DervProf

Joeskeppi wrote: »

Derv, why are you going out of your way to be patronising and rude?

Rude ?

Patronising ? (It might seem like that, but I am simply trying to have an honest and polite debate/argument with RM).

System

You're not at all, you're just pursuing a little agenda as a result of your bickering recently, no amount of your sanctimonious posts are going to disguise it.

JonnyBravo

Is that it?

So you're saying that if you're on a repayment mortgage for 1 year and then make a 30k overpayment you'll owe less than if youre on a IO mortgage for 1 year and then make a 30k overpayment?

Do you think this is surprising (seeing as you'll have paid more over the course of the year on the repayment)?

No really? Was that it?
Am I lost?

DervProf

Joeskeppi wrote: »

You're not at all, you're just pursuing a little agenda as a result of your bickering recently, no amount of your sanctimonious posts are going to disguise it.

If that is your conclusion, fair enough. In reality, I have no agenda, just an opinion that a forum member posted soemthing that was wrong. He and I are trying to find agreement on the matter. It is also raising some interesting (pun intended) points about IO vs Repayment mortgages. Yes, they are slightly detailed points, but they can be useful to those who might be tring to weigh up the pros and cons of IO vs repayment.

DervProf

JonnyBravo wrote: »

Is that it?

So you're saying that if you're on a repayment mortgage for 1 year and then make a 30k overpayment you'll owe less than if youre on a IO mortgage for 1 year and then make a 30k overpayment?

Do you think this is surprising (seeing as you'll have paid more over the course of the year on the repayment)?

No really? Was that it?
Am I lost?

Yes, that is it.

See posts #146 & 149.

JonnyBravo

DervProf wrote: »

Yes, that is it.

See posts #146 & 149.

Brilliant.
I can see the wider point and how that information may be useful (theoretically) to someone who has come down with the last shower.
I'll leave RM to continue with his line of questionning around how it relates to his comments.