Lazy repost - Interest only, the ticking timebomb say Daily Mail

nearlynew

DervProf wrote: »

I think the first statement could be debated for a long time without any real conclusion.

Carry on mate.
Debate it all you like.

I know for a fact that it is true and won't be needing any debate.

wotsthat

Emy1501 wrote: »

I therefore suggest that the FSA have more of a clue then me or you and I highly doubt there are loads of whizz kids out there making a better return than a normal repayment method.

I suspect you are guessing what you want to believe.

Well I hope that the FSA have more of a clue but they are dealing with the same incomplete information we are. I also doubt they have fully considered BTL mortgages where 65%(?) are IO.

The average mortgage holder is paying a touch over 3% interest (that was before the recent SVR rises mind). You don't need to be whizz kid to see that in many cases it would be irrational to make capital repayments.

Yes I want to believe that IO isn't a 'ticking time bomb' - doesn't everyone? It's not a complete guess though - the CML refuted the claims of the FSA and issued a very detailed report containing data that the FSA survey weren't able to consider before making their own conclusions.

Graham_Devon

DervProf wrote: »

I think the first statement could be debated for a long time without any real conclusion.

The second is much harder to argue with. I don't think that there is much doubt that most people switching from repayment to IO will be doing so because they are having financial difficulties. No, there is no proof of that, but it doesn't take too much imagination to see it.

Also allows one to get the loan in the first place.

shortchanged_2

pinkteapot wrote: »

However, the point above doesn't make sense to me. If you were on a repayment mortgage your monthly repayments would have been higher and your overpayments less by the same amount. The mortgage balance would however be exactly the same at this moment in time (assuming you had spent exactly the same on the mortgage as you have done).

This is exactly the point I am making.

I'm still waiting for FTBFun to explain how Renoman is £26K better off though.

wotsthat

Graham_Devon wrote: »

What is his plan then?

Think it's quite clear that everyone is missing out a very important word here. "Recognised". That's what the FSA stated 20% had. A recognised repayment plan.

You don't know Renoman's plan? Bloody hell - he's only mentioned it about 300 times. I think it's to make capital repayments if finances allow and at retirement sell up and buy somewhere smaller and repay any residual mortgage.

I've not missed the recognised bit. That's why I said we're guessing at the size of the ticking time bomb. Don't most people just bimble along and things just work out? There will be some inheritances, wage increases, pension lump sums, inflation etc. etc. Of course a cash transfer needs to take place eventually and there will be some distressed sellers but, on the whole, I'm confident that people will muddle through.

pinkteapot

shortchanged wrote: »

This is exactly the point I am making.

Sorry for repeating you - skim reading at work and I missed what you'd said.

shortchanged_2

pinkteapot wrote: »

Sorry for repeating you - skim reading at work and I missed what you'd said.

That's alright, it just backs up my point.

wotsthat

shortchanged wrote: »

This is exactly the point I am making.

I'm still waiting for FTBFun to explain how Renoman is £26K better off though.

!!!!-a-Doodle-Doo. Someone else that must have missed the 'debate renoman's mortgage' threads.

IO allowed Renoman to use the money that otherwise would have gone into capital repayments to be spent on renovations instead with a plan to overpay at a later date.

As it happens it's irrelevant because, judging by his overpayments, his income has been much better than he predicted at the start of his 'adventure'.

If anyone would like to book Renoman for an after dinner speaking tour just let me know as I'll be acting has his PA and will be ghost writing his book too.

DervProf

wotsthat wrote: »

You don't know Renoman's plan? Bloody hell - he's only mentioned it about 300 times. I think it's to make capital repayments if finances allow and at retirement sell up and buy somewhere smaller and repay any residual mortgage.

And I think I`ve mentioned it about 300 times that he metioned it 300 times.

Be careful. You better rephrase the "if finances allow" bit otherwise he'll accuse you of wishing a plague of locusts upon his "acreage".

Graham_Devon

wotsthat wrote: »

You don't know Renoman's plan? Bloody hell - he's only mentioned it about 300 times. I think it's to make capital repayments if finances allow and at retirement sell up and buy somewhere smaller and repay any residual mortgage.

If finances allow being the key point that it's not a plan, rather a gamble.

How many others took interest only mortgages with this mindset?