MSE News: Interest-only mortgages on critical list as Co-op pulls plug

shortchanged_2

RenovationMan wrote: »

You must move in different circles than me shortchanged because everyone I know is capable and responsible with their finances. I guess birds of a feather really do flock together.

Or so they tell you.

RenovationMan

shortchanged wrote: »

Or so they tell you.

Yes, everyone is a liar and in financial distress, except for you. Is that how you convince youself that your arguments are sound? :rotfl::rotfl::rotfl:

The_J

I would say that 99% of people understand interest only and the risks. The problem is, and you can see from this website, that when their plans go wrong they look to complain not take personal responsibility.

It's very easy to say "I WOZ MIZ SOLD GUVNOR" because these people have very selective memories.

RenovationMan

The_J wrote: »

I would say that 99% of people understand interest only and the risks. The problem is, and you can see from this website, that when their plans go wrong they look to complain not take personal responsibility.

It's very easy to say "I WOZ MIZ SOLD GUVNOR" because these people have very selective memories.

Totally agree. Pity that that we seem to be moving towards a 'claims culture', helped in part by websites such as MSE.

I had a poorly performing Endowment and instead of moaning about it and trying to claim for 'misselling', I cashed it in and put it into a much better performing investment vehicle. Shame not everyone wants to take responsibility for their own finances and their own financial decisons.

dtl

In the recent past banks have been irresponsible lenders to equally irresponsible borrowers. When I first took a interest only mortgage I had to prove I have a repayment vehicle in place that was likely to meet my obligations and the bank wanted to review its performance every few years - a totally sensible approach.

First they stopped reviewing, then they stopped caring to get evidence of any repayment vehicle. Even not long after the crisis I could have borrowed 5x my salary on interest only with only the vague request that I make sure I could repay it eventually and that with a 15% deposit - that actually scared me.

The problem is that some banks are now being utterly hypocritical about interest only deals. In a previous article it was reported that " If a pension is to be used, then the pot must currently be at least £1 million" That puts you in a position to pay off a £250k mortgage BEFORE any growth in your pension fund and still have a conservative £30k/yr pension (equivalent to £50k salary based on the '60% rule')

If you didn't pay a penny more into you pension for 20 years and got only inflation matching growth you would have almost £500k available to pay your mortgage and I bet they don't sell their pension investments on growth assumptions anything like that low!

Thrugelmir

RenovationMan wrote: »

Its a shame that we now live in a 'nanny' society where financial products are geared towards the lowest demoninator, the foolish and the uneducated.

The issue for the banks is to contract their lending books and deleverage.

That's why banks have suddenly changed their tune. After voicing their concerns about the FSA changing the rules. The banks are now unable to move quick enough.

diamonds

Martin...."Of course, it is prudent to pay off your mortgage, though brokers say interest-only makes sense for some groups, such as the wealthy"

CODSWALLOP !

The poorest benefit the most, buy the FAMILY home pay the interest over the term (as if rent) on fixed & capped mortgages, sell property when mortgage completes, pay off capital due on a house worth way more than it was approx 25 years ago by downgrading now your kids have left (or this forces them to leave) and have some of the equity released from the sale left after downgrading to fund retirement/saving/kids education or inheritence or spoil yourself.

The removal of interest only products only "suprisingly" benefits the financial institutions.....more revenue for less risk (not that most given the last few years are fit to assess professional risk but can you on your mortgage application ??), it makes the UK economy weaker as less "disposable" money is spent in the economy after your housing costs for buyers on capital & interest mortgages, but dont worry there are loans and credit cards to help you through from the very same financial institutions and a bit more (MADNESS).

The gap between poor/middle class and wealthy grows greater....but dont expect your MP to support legisaltion that requires his mates to get poorer...thats for YOU.

Whilst Housing at Local Authorties & Central Government pick up the tab of subsides in social housing out YOUR tax as less people can buy - all the while the richer get richer...and directly & indirectly via tax WE get poorer as individuals & a nation, remember wave the millionaries on thier boats from the beach while you are on your 1 week a year abroad self catering £250pp package holiday you scrimped & saved ALL year for !

YOU GOTTA LOVE A OPEN MARKET !

Thrugelmir

diamonds wrote: »

The poorest benefit the most, buy the FAMILY home pay the interest over the term (as if rent) on fixed & capped mortgages, sell property when mortgage completes, pay off capital due on a house worth way more than it was approx 25 years ago by downgrading now your kids have left

A £120 billion of interest only mortgages (10% of all outstanding mortgage debt) is due for repayment in the next decade.

Who are these people going to sell to? There isn't going to be the mortgage funding available.

dougz_2

Thrugelmir wrote: »

A £120 billion of interest only mortgages (10% of all outstanding mortgage debt) is due for repayment in the next decade. Who are these people going to sell to? There isn't going to be the mortgage funding available.

Simple, they will just have to sell to a landlord, wealthy enough to still get interest only BTL mortgages. Who will promptly chop it into bedsits to let out to the government, at an ever spiralling rent, to house all those that can't find a job that pays enough to afford their own.

RenovationMan

Thrugelmir wrote: »

A £120 billion of interest only mortgages (10% of all outstanding mortgage debt) is due for repayment in the next decade.

Who are these people going to sell to? There isn't going to be the mortgage funding available.

Are you really saying that you believe that ALL IO mortgages that are due for repayment in the next decade are without any form of repayment vehicle and will remain that way for the next decade?

Really? :eek: :rotfl: