Interest-only mortgage borrowers forced on to more expensive repayment plans

ukcarper

shortchanged wrote: »

God, whatever happened to contractual agreements?

When someone takes out an IO mortgage, a date is set for the repayment of the debt in full. It's there, in black and white.

They made the choice to have the lower payments over the years via an IO mortgage so they should accept the consequences whatever they may be when the term of the mortgage has finished.

I’ve already said the final decision should rest with the lender but that it is not to say it will always be in their best interest to call in the loan and if they chose not to I can’t see anything wrong with that.

ukcarper

Graham_Devon wrote: »

I've given up the will to argue it out Carper.

If you honestly can't see issue with ths, and after all generali and thrugelmir have told you about how banks actually work...theres little I can say.

One slight issue. It's unlikely, as a pensioner, Paul will be in the house another 25 years. Banks are not landlords, and I don't know why you expect them to be. All money tied up in these houses, is money that cannot be lent to others. In so many other ways you have argued directly against this sort of proposal....so long as it doesn't effect a homeowner who may have to sell.

Contracts may aswell simply be shredded.

I’m not sure how long Paul lives in the house has anything to do with it.

Emy1501

ukcarper wrote: »

I’ve already said the final decision should rest with the lender but that it is not to say it will always be in their best interest to call in the loan and if they chose not to I can’t see anything wrong with that.

Yep and the lender has refused another IO loan and offered a 7 year repayment term. It's strange that some people have problem with that and seem to believe they have more understanding of the matter than the lender.

ukcarper

Emy1501 wrote: »

Yep and the lender has refused another IO loan and offered a 7 year repayment term. It's strange that some people have problem with that and seem to believe they have more understanding of the matter than the lender.

It's not clear if that is a new loan or not and if it is I would have thought that was reasonable and if the person has enough equity and is desperate for money she should look at equity release.

nickj_2

the banks have probably figured they have lent to people who can afford the interest ,but have no chance of repaying the capital , i guess they're getting in early instead of leaving it another 18 years or so until it come to the crunch time of settling the debt only to find there's no cash

Emy1501

ukcarper wrote: »

It's not clear if that is a new loan or not and if it is I would have thought that was reasonable and if the person has enough equity and is desperate for money she should look at equity release.

Sounds like terms up or is up soon. Therefore it seems lender has offered repayment up to max age of 75 which is max lenders tend to lend on. I suspect she could find someone to do equity realise but I suspect the terms will not as favourable as what she is on now.

ukcarper

Emy1501 wrote: »

Sounds like terms up or is up soon. Therefore it seems lender has offered repayment up to max age of 75 which is max lenders tend to lend on. I suspect she could find someone to do equity realise but I suspect the terms will not as favourable as what she is on now.

We are not sure and if it is will they actually foreclose the figures are rubbish anyway because if the interest portion is £79 there is no way a 7 year repayment would be £900.

Thrugelmir

nickj wrote: »

the banks have probably figured they have lent to people who can afford the interest ,but have no chance of repaying the capital , i guess they're getting in early instead of leaving it another 18 years or so until it come to the crunch time of settling the debt only to find there's no cash

Banks need the cash. Mortgage books will have to contract to comply with Basle 3 (by 2018).

SkyeKnight

ukcarper wrote: »

We are not sure and if it is will they actually foreclose the figures are rubbish anyway because if the interest portion is £79 there is no way a 7 year repayment would be £900.

She's paying £79 on her old mortgage which is ending - I know friends with older mortgages as low as 1/4% over base rate. The new 7 year mortgage is £900 a month, but it's presumably not the same interest rate - so I imagine even if she could stay on interest only she still wouldn't be able to afford it.

ukcarper

SkyeKnight wrote: »

She's paying £79 on her old mortgage which is ending - I know friends with older mortgages as low as 1/4% over base rate. The new 7 year mortgage is £900 a month, but it's presumably not the same interest rate - so I imagine even if she could stay on interest only she still wouldn't be able to afford it.

It doesn’t say that it just says she has been refused another mortgage.