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

Idiophreak

Conrad wrote: »

So what?

She has an ordered life, the Bank is being paid, she has sufficient pension income to live on.

What possible harm is she doing?

Well, technically, she's not keeping up her end of the deal. She was supposed to be *buying* the house, not *renting* it.

If the bank wanted to rent the place out, doubtlessly they could charge rather more than she's paying in interest. So, one way or another, she's doing the bank out of money

Conrad

DVardysShadow wrote: »

I would say that if she had any sense, she would have been paying a bit more than the interest, which would give her a stronger base to argue from

If she'd had a repayment mortgage she would have no stronger case. Either way she has to settle up.

This isn't about I/O, it's about FSA rules causing lenders to ensure a mortgage is cleared by a given age, whereas in the past common sense mean't the vast majority of folk carried on un - hindered, not forced to sell up.


ARE PEOPLE SUDDENLY INCAPABLE AT AGE 70, IS THAT WHAT W'ERE SAYING? Remember I'm talking about long held existing mortgages.

Conrad

Idiophreak wrote: »

Well, technically, she's not keeping up her end of the deal. She was supposed to be *buying* the house, not *renting* it.

If the bank wanted to rent the place out, doubtlessly they could charge rather more than she's paying in interest. So, one way or another, she's doing the bank out of money

Again, this is a term / age issue, nothing to do wiuth I/O. The Banks aren't mentioned the repayment basis to such people, it's simply and arbitary age thang being enforced now thanks to the FSA.

Imagine you divorced aged 55.
You had to start over.
Then come age 69, whilst managing perfectly well and paying the mortgage you have a letter telling you it's time to sell up.
You would feel most agrieved. You've done the right thing all your life, and yet again the state tells you otherwise.

[Deleted User]

What happens if she ends up in a care home, and the capital of the property is used to pay for it (many care homes allow you to 'borrow' the money and pay from capital after death). The bank could end up not receiving it's £140k

A care home could cost at least £25k a year, but lets pretend that it's 36k a year. 10 years in a care home would destroy all of the capital in the house.

DVardysShadow

Conrad wrote: »

If she'd had a repayment mortgage she would have no stronger case. Either way she has to settle up.

This isn't about I/O, it's about FSA rules causing lenders to ensure a mortgage is cleared by a given age, whereas in the past common sense mean't the vast majority of folk carried on un - hindered, not forced to sell up.


ARE PEOPLE SUDDENLY INCAPABLE AT AGE 70, IS THAT WHAT W'ERE SAYING? Remember I'm talking about long held existing mortgages.

I'm thinking that the FSA intention is to ensure that new business is arranged to meet the repayment requirement and that best efforts are made to meet the requirement with existing business. Not to turf people out of their homes.

Having said that, I think if your client had been paying IO comfortably, then she could have paid more. And I think she would have more sympathy.

abaxas

A mortgage broken with a conscience?

Next you'll be telling me Lewis Hamilton isn't the lead singer of JLS.

HAMISH_MCTAVISH

Idiophreak wrote: »

Well, technically, she's not keeping up her end of the deal. She was supposed to be *buying* the house, not *renting* it.

If the bank wanted to rent the place out, doubtlessly they could charge rather more than she's paying in interest. So, one way or another, she's doing the bank out of money

What Conrad is saying is that the banks are, and have always been, quite happy to continue renting their money to old people on interest only deals.

But now the FSA won't let them.

It's one thing for the bank to decide it doesn't want to do business in this sector.

Quite another thing for the government to decide that people are not capable of thinking for themselves and banning all such loans in case a few were abused. With the consequence being pensioners are forced out of their homes.

Emy1501

Which FSA rules are these? I thought that any suggested regulations had not come in yet and banks were still allowed to do as they pleased?

Also when you take out an IO mortgage isnt it taken out over a term of the mortgage. Is this more likely that the term has passed and the Lender wants their money back?

HAMISH_MCTAVISH

ringo_24601 wrote: »

What happens if she ends up in a care home, and the capital of the property is used to pay for it (many care homes allow you to 'borrow' the money and pay from capital after death). The bank could end up not receiving it's £140k

A care home could cost at least £25k a year, but lets pretend that it's 36k a year. 10 years in a care home would destroy all of the capital in the house.

The nature of a mortgage is such that it is always first charge on a house sale.

The capital would have to be repaid to the mortgage company first, then other claimants could fight over the remaining sum.

Your point is completely without merit.

gagahouse

This is one more example of the pendulum swinging to the other extreme as far as regulation is concerned. I have the misfortune of having to deal with the likes of the FSA , they are very driven by the perception of their failure in regulating the industry in the last decade. Expect to see more and more what I call 'overcompensation' type actions.

Life for the banks and related businesses is going to get very tough, this is what the public wants, they shouldn't be surprised at the many types of unintended consequences that will result from this.