UKs biggest lender ends IO mortgages without evidence.

Pimperne1

All my mortgages are IO. The first one I took out required an endowment to run alongside it but after that they only required you to say you would pay it off with the equity after 25 years (which is pretty reasonable, I doubt there has been a 25 year period where the mortgage couldn't be well covered by the value of the home). You then might then have to rent but only if you had been stupid in the meantime.

Cleaver

My Dad is mortgage free and I know that my mate Steven has a repayment fixed rate mortgage as we discussed it the other week. Is someone making a note of all these and keeping count? I recommend we put it all in a spreadsheet, as we don't want to look amateurish when we finalise our press release announcing our in depth financial study on IO mortgages. Do you think The Economist would ne interested? They run financial stories don't they?

julieq

Lost count now, damn

Cleaver

Jimmy_31 wrote: »

i mainly move around building sites.

Jimmy_31 wrote: »

I have never worked with any builders

What are you doing hanging out on building sites if you're not working with builders?

Cleaver

julieq wrote: »

Lost count now, damn

For f*ck's sake. I knew we should have kept a spreadsheet. Do you think this is how the Nationwide stats deparment do their monthly report?

"Brian, just to let you know that my mate Dave just sold a house. £95k I think."
"Thanks Bob, let me just make a note of it on the back of this napkin. Ahh b*lls, my pen has run out. Can I borrow yours'?"
"No probs mate. Oh, and the phone rang while you were at Greggs, Shelia from Crewe was just letting you know that she's bought a 3-bed semi with a lovely garden for £178,000."
"Ahh, cracking stuff, I'll make a mental note of that".
"So what average are we looking at this month?"
"Dunno, about £140,000 I guess. Ooh, wait a second, didn't I make a note of one yesterday?"
<pastry from sausage roll drops on to the carpet>

michaels

I do not understand, someone please explain:

Renting from a landlord is fine. Renting from a bank (IO) is the most financially stupid thing ever.

Person A borrows 90% ltv, ends up with a high interest rate and pays off a minute amount of capital on a repayment mortgage in the first couple of years.
Person B borrows 50% ltv gets a generous interest rate but is IO.
As far as I can tell from the comments on here, the first borrower is sensible and a great proposition, the second is a liability.

I know I am stupid so someone please explain it to me.

Jimmy_31

Cleaver wrote: »

What are you doing hanging out on building sites if you're not working with builders?

Like i said i dont work with builders i work with tradesmen, there is quite a big difference between the two.

Graham_Devon

michaels wrote: »

I know I am stupid so someone please explain it to me.

Yes. Person B is a tiny fraction of the amount of people who took IO mortgages.

Pimperne1

I read on another website a description of Interest Only mortgages - "Agree the price today, pay for it in 25 years time". If you had bought the average house in 1952 (as far back as Nationwide records go) it would have cost £1900, 25 year later it was worth £12.5k, if you had bought another in that same year for £12.5k you could have sold it in 2002 for £95k, if you had bought another one in 2002 for £95k nine years later it would be worth £162k.

julieq

Cleaver wrote: »

For f*ck's sake. I knew we should have kept a spreadsheet. Do you think this is how the Nationwide stats deparment do their monthly report?

To be honest, in my experience of generating figures for survey reports it probably is. There's usually a day out somewhere nice at the end of it where you get to hear the results being presented back to you and then have a fine buffet lunch, and often a prize if you're early with your return, so most of it is made up.