People in thier 60's being forced to sell homes.

RenovationMan

ringo_24601 wrote: »

As a business case, it is quite stupid of the bank to want their capital back when they're getting £6k interest a year - roughly 4.3% - rather than receive nothing back if she paid it off

At last! Someone gets it!

RenovationMan

shortchanged wrote: »

Well yes really if she can't pay up the capital owed at the end of the term.

When is the end of the term?

RenovationMan

shortchanged wrote: »

You're opening a can of worms Renoman. Lack of regulation is what got us in this mess in the first place. Leave too many open doors and they get abused by shrewd and/or fraudulent people.

So now this old lady is 'shrewd and fraudulent'?

!!!!!!. :rotfl:

shortchanged_2

RenovationMan wrote: »

So now this old lady is 'shrewd and fraudulent'?

!!!!!!. :rotfl:

Missing the point again Renoman. I'm taking about the bigger picture not just this 'lil old lady'. :doh:

Neverland

ringo_24601 wrote: »

As a business case, it is quite stupid of the bank to want their capital back when they're getting £6k interest a year - roughly 4.3% - rather than receive nothing back if she paid it off

Not if the bank's cost of funding and marginal expenses are more than 4.3% a year...

RenovationMan

Neverland wrote: »

Really, really stupid analogy

APR on a credit card 15-20%

SVR on a mortgage right now 3-6%

Credit cards are a goldmine because of the interest rate spread over funding them

For lenders with even SVRs average there is no spread over the costs of a bank's funding because of their operating costs

So banks don't make money on mortgage lending and would actually prefer their customers to pay off their mortgages early? I assume that they offer mortgages as loss leaders to get customers through the door so that they can push credit cards onto them because that's how they make a profit?

Really, really stupid. :rotfl:

RenovationMan

shortchanged wrote: »

Missing the point again Renoman. I'm taking about the bigger picture not just this 'lil old lady'. :doh:

Yes, and that's your problem. You have the same viewpoint regardless of whether we are talking about a little old lady who is meeting her mortgage payments as you do for someone who defrauded a mortgage company and ran off with the money.

shortchanged_2

RenovationMan wrote: »

Yes, and that's your problem. You have the same viewpoint regardless of whether we are talking about a little old lady who is meeting her mortgage payments as you do for someone who defrauded a mortgage company and ran off with the money.

To quote your one of your favourite sayings 'from little acorns grow mighty oaks'.

RenovationMan

shortchanged wrote: »

To quote your one of your favourite sayings 'from little acorns grow mighty oaks'.

So you think that this little old lady is highly likely to move on from her 'acorn' of not being able to pay off her mortgage to and 'oak' of defrauding a mortgage company and running off with the money?

I mean, really?

Emy1501

RenovationMan wrote: »

OK, I'm willing to chat about this but can we please, for the love of God talk about this one little old lady's issue and not bring in all the other soapbox subjects of HPI, liar loans, bankers bonuses, the cost of oil, gold, benefit fraud, people's desperation to own houses, etc. etc. that this lady patently has not had a hand in.

I mean, can we for once have a discussion without all the vitriol and hatred?

*sigh* here we go then... a leap of faith...

My viewpoint on this particular issue is that the lady seems to have a high level of equity. for one reason or another, a portion of the mortgage has not been paid off her mortgage balance (this could be because of a failing endowment, divorce, etc.). Whatever the reason she has clearly taken her mortgage into her retirement years so the bank must have agreed to this and must have checked her pension income to ensure that she could afford it. We can also assume that as the lady is over 10 years into retirement that her pension covered the mortgage interest during periods of 'normal' interest rates.

We can also assume that the bank has more risky customers, for example people who have lied about their income and bought houses that are way out of their means, people who are sevarl months in default and are not paying their mortgages at all and people who are in substantial negative equity.

Given this I'd say that the bank would be better off hassling the people above who have been reckless than an old lady who is paying all her bills on time and represents a good risk. The bank will receive many many times in interest payments the amount they originally loaned to the lady and they will have the balance of the debt paid off when she finally dies.

Contrast this to someone who lied about their income and bought a house they could never afford (I'm talking about even the interest payments), who fall behind in their mortgage payments and who are in negative equity where if they go bankrupt the bank has absolutely no chance of ever getting their money back.

Which case should the bank be pursuing, the one where they stand to lose a fortune or the one where they stand to make a safe profit?

The issue is though that no lender will touch her. People are risked as a group rather than as an individual. She also seems to have made no effort to pay any of the mortgage off over the last 15 years and is not making any effort to pay it off now.

I feel for her but her lender is a commercial business and if they do not want to take on her risk at the end of the term they should not have too.

My understanding is equity release schemes etc would be open to her and maybe there is a gap in the market for a lender to step in and take on her type of risk.

Maybe Lenders will need to be clear regarding what will happen if the mortgage is not paid at the end of the term going forward.