Interest only

silvercar

opinions4u wrote: »

And how long should the lender have to subsidise him for, in addition to the period of time they've already helped him out?

The lender isn't subsidising if all the interest is being paid, just transferring to a different product. Given that loads of people have interest only mortgages and a fair proportion of them have no real plan to pay off their mortgage (other than sell up) it seems that OP just chose the wrong mortgage initially.

rizla01

Praps Im wrong but would have thought one of the questions someone on here might have asked is what equity does he have in the house and what part of UK is it in i.e. will it sell easily/for good money?

opinions4u

silvercar wrote: »

The lender isn't subsidising if all the interest is being paid, just transferring to a different product.

They are. The capital that isn't being repaid as planned can't be lent on to new customers (or used to pay down the lender's reliance on wholesale funding).

By missing out on cross-sale opportunities to new customers or having to renew expensive wholesale funds when they didn't originally need to there is additional cost to the lender.

Additionally, the more loans that the lender has on its books that are interest only, the higher the costs of funding are.

silvercar

opinions4u wrote: »

They are. The capital that isn't being repaid as planned can't be lent on to new customers (or used to pay down the lender's reliance on wholesale funding).

By missing out on cross-sale opportunities to new customers or having to renew expensive wholesale funds when they didn't originally need to there is additional cost to the lender.

Additionally, the more loans that the lender has on its books that are interest only, the higher the costs of funding are.

Fair points.

Whenever I've taken a mortgage there has been the simple option repayment or IO, so by choosing IO and overpaying by the amount that a repayment would be, I would always have the safeguard if times were hard to repay the interest only. Food for thought.

BoGoF

silvercar wrote: »

Fair points.

Whenever I've taken a mortgage there has been the simple option repayment or IO, so by choosing IO and overpaying by the amount that a repayment would be, I would always have the safeguard if times were hard to repay the interest only. Food for thought.

When was the last time you took out a mortgage? The days of interest only on demand are long gone.

sebtomato

BoGoF wrote: »

When was the last time you took out a mortgage? The days of interest only on demand are long gone.

Unless you take an offset mortgage, like the one First Direct offers, as those are usually interest only mortgages.

katejo

Mrs_Z wrote: »

I believe the Government's Rent a room scheme allows him to receive up to £4,250 p.a tax free but yes, he'd have to declare it. Worth looking into.

You don't have to declare anything as long as your rent stays below the £4250 but if you are a current single occupant you will lose part of this due to the extra council tax due. You can only get round this by doing a tax return and declaring everything.