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

[Deleted User]

HAMISH_MCTAVISH wrote: »

Your point is completely without merit.

Bit harsh, i was only postulating.

System

Conrad wrote: »

INTEREST ONLY - following her divorce 14 years ago she had no option but to take I/O as this was the only affordable solution. Again where's the issue, she can afford the payments and on death the capital balance will be cleared.

And if the mortgage term comes to an end before death? The BS then get bad press for throwing an old woman out on the street with no money so that they can recoup their outlay.

shortchanged_2

This is exactly the sort of thing the FSA should be clamping down on.

A mortgage deal is exactly that. A sum of money lent over a fixed period of time and if it is IO then there is usually a lump sum to pay back at the end.

With this little old ladies example I'm sorry but it sounds like she has plenty of equity with which to downsize with. Isn't this what many of the property bulls were actually advocating a couple of years ago as a repayment vehicle?

This example is another example of what is wrong in the housing market and why things have got so messed up.

The point of an IO mortgage is that the capital is payed off at the end of the term.

kabayiri

Conrad wrote: »

A good life is one where people make a difference and challenge the status quo.
...
There is now't fair about forcing people to move home. One day when your'e 75 and cenjoy a supportive neighbour network you might want to reflect on this.

Status quo eh?

It's fast becoming a thing of the past.

Between now and the time I reach 75 I expect a whole host of state rule changes to be in place which could impact me.

We might have to fund our own care costs with a charge levelled on our property. The retirement age will obviously be higher. The state may be less generous with financial support to the elderly.

Your client might well have lived through a peak period in our recent history. She has certainly benefitted from the longest period of housing price growth.

So much for status quo.

Itismehonest

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 know absolutely zilch about mortgages in recent years. I seem to remember, I could be wrong, that going back 30-40 years a mortgage was expected to be paid off before retirement. That had a certain logic to it.

I certainly feel for the lady in question. I think many of these sort of problems lie in the way that the goal posts keep getting moved. It makes it extremely hard for older people, particularly if on a fixed income, who don't have the means to plan large financial changes into their lives.

Emy1501

Itismehonest wrote: »

I know absolutely zilch about mortgages in recent years. I seem to remember, I could be wrong, that going back 30-40 years a mortgage was expected to be paid off before retirement. That had a certain logic to it.

I certainly feel for the lady in question. I think many of these sort of problems lie in the way that the goal posts keep getting moved. It makes it extremely hard for older people, particularly if on a fixed income, who don't have the means to plan large financial changes into their lives.

Not sure how the goal posts have changed though. When I took out an IO mortgage with my own repayment vehicle 15 years ago it had to be taken over a fixed term. I know people with BTl's and it the same. Therefore this lady would have known the same but chose to do nothing about. Now the bank want their money back and some how she is being hard done by.


This is nothing to do with the FSA I suspect but simply down the bank wanting their money back and the end of the term. I know someone with a BTL this happened to and they were given 4 weeks to pay it back at the end of the term.

borkid

Conrad wrote: »

She arranged it many years ago with her lender and like many didn't think much about it because in the past there was a general unspoken rule that lenders allowed mortgages to continue on in retirment.

Was there? First time I've come across this. When my husband and I took an interest only mortgage out in early 80s we fully expected to pay at the end of the term and took out an endowment policy to cover it. In fact we paid the mortgage early due to redundancy and when the endowment matured we had a nice sum of money to do as we wished.

Graham_Devon

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?

You may not agree with her lifestyle, but surely that's not justification to condone people being forced out of home.

REMEMBER, SOME HAVE INSUFFICIENT EQUITY TO DOWNSIZE AND BUY AGAIN, ESPECIALLY THOSE WHO HAVE BEEN DIVORCED AND LOST MUCH ALREADY.

Treating customers fairly means just that. Treating other customers fairly too.

How fair is it to let this person lie, while getting others to pay up?

If she wasn't on interest only, this wouldn't be an issue.

Expect MUCH more of this sort of stuff.

GDB2222

chewmylegoff wrote: »

hell she could even sell it to an equity release pirate if she wanted to, since her desire seems to be just to stay there until death.

I find it interesting that you mention this, as I know quite a bit about the property reversion market. Under this, the lady would sell her property to an investor, subject to the right to live there rent-free for the rest of her life. You referred to this as piracy, although it obviously depends on how much is paid for the "reversionary interest", i.e. the right to the property after the rent-free tenancy ends.

The reversionary interest is usually valued at a discount rate of around 4 to 5%. That means that the investor is getting the same capital growth in the value of the property as an ordinary buy to let investor, and the 4 to 5% discount compensates the investor for his lost rental income. Bear in mind that, unlike a buy to let investor, someone who purchases a reversionary interest has no income coming in to service the mortgage, so he has to finance the whole thing out of his own capital.

If this lady is in good health, aged 69, she has a life expectancy of around another 22 years. Discounting for that period, the purchase price the investor would pay would be around 35% to 45% of the open market value of the property. That does not seem like piracy to me, but I can imagine that it might seem like piracy to people who do not understand how the figures are arrived at.

Of course, for the investor it has the advantage over buy to let of requiring far less hands-on intervention, as normally the person with the rent-free tenancy is responsible for maintenance of the property. The disadvantage for the investor is that this is a very long-term investment, producing no income, where the investor is locked in until some uncertain date in the future when the tenant eventually dies. It is hardly surprising that there are not floods of people offering to buy these investments.

In this particular case, it might be a reasonable option for the client to consider if she had other circumstances, e.g. if she had no daughter that she wants to pass the house onto when she dies.

Of course, I agree with you that the obvious solution is just to downsize.

CRASH_BANG_WALLOP

Conrad wrote: »

Another unforseen consequence of FSA regulation.

another groan from conrad about the FSA. dude why not write to them and tell them why you think they are so wrong with all their nasty regulations