Mortgage Debt Arrears improving markedly

wotsthat

Graham_Devon wrote: »

Brilliant. Excellent news. I'm overjoyed. "Some" arrears are being paid, which still leaves arrears for the people in them, but bloody brilliant news. How can anyone even suggest there was a problem at all?

It's now all fixed. Joyous.

I'm sure there are some holes to be picked in the methodology but, on the face of it, the research doesn't look too shabby.

It shows that there are a significant number of people quietly getting on with life, paying down debt and improving their circumstances.

Judging by the fact that you've made a number of posts and avoided talking about the OP I'm guessing you agree.

RenovationMan

IveSeenTheLight wrote: »

Ir doesn't need to be.
My remortgageing planinvolved reducing the amortization period each remortgage.
I could afford as our household income had increased and we also made overpayments.

Taking a BOE linked loan when the rates are historically low is a good time to do so.
Far better than paying a higher rate for that loan.

Make hay while the sun shines. Capitalise on the low rates.
when rates rise, be ready and able to pay down more capital.

A lot of the MFW's use this tactic (reducing the term of the mortgage each time you remortgage). I'm not so sure how safe it is, because one of the main incentives behind mortgage reduction for many people is to give themselves breathing space for times when things aren't going well financially. If you reduce your term, then you're essentially throwing away that breathing space and starting again from scratch.

I'm not sure what the benefit of this tactic is. If you don't 'officially' reduce the term, you continue to make the same overpayments and end the mortgage in the same time frame, but still maintain the flexibility if you need it.

What am I missing ISTL, what's the benefit of this approach?

IveSeenTheLight

Graham_Devon wrote: »

1.Rewired will have a big grin on his face reading that.

2. I do too.

3. I have no idea who rewired is. All I know is I love him, and he (she) loves me.

Maybe it's just incorrect wording, but let's look at your statements

Sentences 1 and 2 infer that you know rewired or that you are the same person.

It contradicts sentence 3. where you claim you don;t know them.
If you don't know them, how will you know that they will have a grin on their face. Even if it is just visually accross a crowded room, you would still need to know it's them.

I love logic puzzles, occasionally I make mistakes in them. This one I think has an error.
You wither know them or you don't.

IveSeenTheLight

RenovationMan wrote: »

A lot of the MFW's use this tactic (reducing the term of the mortgage each time you remortgage). I'm not so sure how safe it is, because one of the main incentives behind mortgage reduction for many people is to give themselves breathing space for times when things aren't going well financially. If you reduce your term, then you're essentially throwing away that breathing space and starting again from scratch.

I'm not sure what the benefit of this tactic is. If you don't 'officially' reduce the term, you continue to make the same overpayments and end the mortgage in the same time frame, but still maintain the flexibility if you need it.

What am I missing ISTL, what's the benefit of this approach?

Possibly by fixing, you take away the temptation to flex out of it again.
That said, if you need the breathing space, you can look to increase the amortization again.

It's worked well for the wife and I.
We rapidly repaid our mortgage when we were young and now we have children she has the luxury many don't have now by being able to be a stay at home mum.

We focusses on reducing our debt as we realised our prefferred life choices would result in a reduction in household earning.

RenovationMan

First time I've seen anyone on here profess 'love' for another username. I suppose it's healthy to love one's self though. Bit narcisistic though to announce it on an internet forum, surely?

Graham_Devon

IveSeenTheLight wrote: »

Sentences 1 and 2 infer that you know rewired or that you are the same person.

I may know rewired.

I may not.

What does that infer?

What I do know is there is no point in me stating if I do, do not, am, or aren't rewired. You are all going to make your own minds up anyway.

Graham_Devon

RenovationMan wrote: »

First time I've seen anyone on here profess 'love' for another username. I suppose it's healthy to love one's self though. Bit narcisistic though to announce it on an internet forum, surely?

I do love rewired.

wotsthat

Fella wrote: »

Unless IRs are kept at 0.5% for the next 25 years this is just one more variation of kicking the can down the road.

0.5% is frequently used in these arguments but generally, like this, it's used out of context.

Just taking blunt averages the average mortage is just over £100k and average mortgage rate around 3.3%. That's £271 interest per month.

Every 0.5% increase in the mortgage rate would cost £42/ month. Increases in rates would be unwelcome but not unbearable for most.

If BoE rates rise in response to an improving economy that will mitgate some of the effects. An improving economy might just improve competition in the mortgage market too.

5 & 10 year rates at 5.5% are available now for anyone who wants to insulate themselve from future increases.

RenovationMan

IveSeenTheLight wrote: »

Possibly by fixing, you take away the temptation to flex out of it again.
That said, if you need the breathing space, you can look to increase the amortization again.

It's worked well for the wife and I.
We rapidly repaid our mortgage when we were young and now we have children she has the luxury many don't have now by being able to be a stay at home mum.

We focusses on reducing our debt as we realised our prefferred life choices would result in a reduction in household earning.

I guess if you have a secure job, double income and a low-ish mortgage (and rate) then there is no real danger. It wouldn't work in my circumstances, but then that's the beauty of financial planning, they are all essentially unique and personal.

As I have said several times, MFW is a long and drawn out process and so anything you can do to help keep motivated is a bonus. Your tactic allows you to see your mortgage term reduce in real-terms, which I can see would be extremely motivating.

I use an amortization calculator to help me compare what my mortgage is with overpayments and what it would have been if I had just gotten a repayment mortgage and made no OPs. I'm about 3 years ahead so far.

My own motivational tactic is to set smaller, achievable targets. I find that 3 years is a decent time period - not too long and not too short. My current challenge is to reduce my mortgage to 50% LTV, based on my home's purchase price. There is no financial advantage in this, as most mortgages max out at 60% LTV anyway, but its a target to try and hit and is therefore motivational.

Once this challenge finishes, I'm going for the 'bear' holy grail of a 3.5 x salary mortgage. Again, from a financial standpoint it has no value, but it will motivate me to continue the OPs.

RenovationMan

rewired wrote: »

You are all going to make your own minds up anyway.

I think most of us already have.