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

Emy1501

jamesd wrote: »

Yes, it's a repayment method, one blessed and described as such by the FSA:

"Examples of possible repayment strategies include: ...
• on death, for example in the case of a lifetime mortgage; or
• sale of the mortgaged property, where this is a credible strategy because of down-sizing or repayment at death."

Whether Santander wants to lend in such cases is a different thing but it is a proper and acceptable repayment method so far as the FSA is concerned and raises the question of whether Santander is or isn't treating their customer fairly and what would happen if they tried to repossess the property.

It'd be interesting to see whether an attempt at a repossession in such cases could succeed, given all payments made on time and the credible repayment plan in place.

Suspect that relates to people who already have a mortgage. Also unless she has a pension paying 35K a year then its unlikely she will hit any affordability calculators.

I suspect if she hasn't stuck by an agreed repayment tool when she took out the mortgage treating customers fairly is not relevant.

I suspect the only FSA argument she would have is if the lender never asked her to explain how she planned to pay off the mortgage at term.

jamesd

Yes, that's for an existing mortgage. It seems possible from context that sale of property on death was always the envisioned repayment vehicle but maybe it was something else and the mortgage is say approaching the end of an agreed fixed term.

For a mortgage being taken out now, repayment at death seems to be acceptable to the FSA but a lot of lenders won't consider even lending into retirement, let alone until death. Which is unfortunate because lifetime mortgages are considerably more expensive for the borrower. Repayment affordability calculations aren't required by the FSA when there's an appropriate repayment vehicle in place so she may pass affordability checks at an income well below £35k.

Graham_Devon

jamesd wrote: »

Yes, it's a repayment method, one blessed and described as such by the FSA:

"Examples of possible repayment strategies include: ...
• on death, for example in the case of a lifetime mortgage; or
.

It's not a lifetime mortgage.

nearlynew

wotsthat wrote: »

Yeah, idiots like these - £500k house and £140k mortgage.

Oh yeah, sorry.


They must be "canny investors"

Neverland

Itismehonest wrote: »

I think this may be part of her problem
http://www.thisismoney.co.uk/money/mortgageshome/article-2115253/Over-50s-face-mortgage-timebomb-says-FSAs-Wheatley.html

Good, they can sell then can't they :rotfl:

Lack of family home problem solved..:money:

silvercar

I would like to know whether Conrad was referring to the lady reaching the end of her agreed mortgage term or if Santander were raiding in early.

wotsthat

Graham_Devon wrote: »

40% of mortgages in Britain are interest only!

Cripes!

80% with no repayment strategy.

Well those figures have come from a FSA represenative so you'd think he'd know what he was talking about.

However, he did say "ticking timebomb" which is always evidence of someone trying to overegg things. Trying to justify the FSA mortgage proposals?

The 80% with no repayment plans include those who have been "bitterly disappointed" with their savings plans. Legacy endowment plans might account for this to an extent. Also just because the FSA don't know about repayment plans doesn't mean they don't exist.

How did the average mortage holder get to 60% LTV?

Not saying it's not true but a pinch of salt is needed.

vivatifosi

Mmm.. I think there's something missing from the info here. My parents are in their 70s and remortgaging without a problem. Issue with endowment and an inheritance that didn't work out. However the big issue is that they are paying down the outstanding debt - plus its a tiny percentage of the total value - probably about 10%.

If I was a bank in the case of this woman I'd be thinking two things:
1) mortgages are cheap at the moment, longer term the only way is up, if she can't afford to pay more than that, how will she cope when interest rates start to creep up again.
2) as she gets older - and by the sound of it living by herself - she will likely incur cost of greater care to stay in the home, how is she going to pay for that and the mortgage?

the_flying_pig

69 year olds with sizeable io mortgages is such foreign territory to me that I don't feel well qualified to comment.

the FSA's real failing was to allow io, which lest we forget was historically a very specialist [& rightly seen as quite complicated] product to get so big. from here in any policy is second best.

not only have our home ownership rates fallen behind many comparable countries but of the homeowners we do have a ludicrously high proportion will only ever own a slice outright.

Graham_Devon

As has been stated many times before, with this thread and the article linked, the majority of IO mortgages were used solely as a way of either being able to afford the mortgage in the first place, or being able to buy more in the first place.

With lower repayment levels, and the boom in IO since 2000, he two go hand in hand. The house, was of course unaffordable in reality, but an IO mortgage put the payment off until later.

We'll be hearing so much more of this over the next 15 years. The FSA are warning us pretty heavily in the main stream media what to expect....and thats people unable to pay what they owe.

This is just the start. I do wish people would stop pretending the majority took IO's because through financial diligence. It's simply not the case.