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Over 50's will bit hit by new mortgage regulations
Comments
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Going back to the point about IO mortgages...
I have friends who own a house in a nice area. They are on IO with no apparent repayment vehicle. I thought this was crazy until they explained to me that they have chosen to minimise the amount of money they put into their mortgage, in order to free up as much as possible to invest in the husband's business. The plan is to continue on IO for the foreseeable future, perhaps even until retirement, and then sell his share of the business and pay off the mortgage with that.
It's not how I would choose to live - I'm much too risk averse to have my own business at all, let alone to risk my home in order to invest in it - but it makes a lot more sense to me than I thought it would before they explained it to me.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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The plan is to continue on IO for the foreseeable future, perhaps even until retirement, and then sell his share of the business and pay off the mortgage with that.
It's not how I would choose to live - I'm much too risk averse to have my own business at all, let alone to risk my home in order to invest in it - but it makes a lot more sense to me than I thought it would before they explained it to me.
If there is a business to sell. As you say horses for courses and no doubt the lender prices accordingly."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
...I personally took a 20 year term on my last mortgage so it would be paid off before I was 60.
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yeah, i bought the biggest/most expensive [tho of course with 40 years or so of compound inflation even a tiny retirement flat may cost more in money-of-the-day terms when the time comes] & i was mildly uncomfortable even with a 20-year mortgage that'll be done when i'm 56.
other than those with sizeable guaranteed pension income [like a really big annuity or a final salary scheme, and of course other special circumstances like say 10-20% low LTV loans on very valuable properties], it's bonkers that we're even talking about the over-50s taking out long mortgages.FACT.0 -
Going back to the point about IO mortgages...
I have friends who own a house in a nice area. They are on IO with no apparent repayment vehicle. I thought this was crazy until they explained to me that they have chosen to minimise the amount of money they put into their mortgage, in order to free up as much as possible to invest in the husband's business. The plan is to continue on IO for the foreseeable future, perhaps even until retirement, and then sell his share of the business and pay off the mortgage with that.
It's not how I would choose to live - I'm much too risk averse to have my own business at all, let alone to risk my home in order to invest in it - but it makes a lot more sense to me than I thought it would before they explained it to me.
One would hope that the business was profitable enough to pay sufficient wage to cover the mortgage. As there'll be a sizable tax bill should he sell the business or draw the retained earnings a later date.
As you say the risk is that the business fails or isn't profitable enough to support even their current outgoings. A major gamble to take. As so many pitfalls.0 -
the_flying_pig wrote: »yeah, i bought the biggest/most expensive [tho of course with 40 years or so of compound inflation even a tiny retirement flat may cost more in money-of-the-day terms when the time comes] & i was mildly uncomfortable even with a 20-year mortgage that'll be done when i'm 56.
other than those with sizeable guaranteed pension income [like a really big annuity or a final salary scheme, and of course other special circumstances like say 10-20% low LTV loans on very valuable properties], it's bonkers that we're even talking about the over-50s taking out long mortgages.
As I have said I can envisage circumstances where it might be necessary but it shouldn't be the norm . I could probably manage a small mortgage on my pension but I would prefer not to but I would if my circumstances changed and I had to. But normally it is best to reduce your monthly outgoings when you retire.
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Thrugelmir wrote: »Artificial support to the market merely provides a crutch to inflate prices higher.
What use is a guarantee if its made with reservation? Totally worthless.
Gifts can cause issues with depreviation of assets in later life for the parents. Nothing new in this so can't be blamed on the current crisis.
What's required is for free market forces to reign. Let prices find their own level. A sustainable one.
I hardly think that parents helping their children constitutes "artificial support".
A guarantee cannot be with reservation, but that's the point because not all parents can afford to take such a risk with their own assets, and some call on the property would resolve it in some cases.
Gifts can indeed cause deprivation and that's why many won't give them, and no that's not new. What's new is that before the lending boom followed by the credit crunch a lot more young people could get mortgages on their first properties than they can now. But it's not the high property prices that are the primary problem in many cases, especially with such low interest rates. It's the difficulty of raising the deposit unaided.
No doubt many people are nevertheless helping their children in "creative" ways. But letting market forces rule and stopping many young people getting on the housing ladder will just case more resentment among the young at the alleged over-privileged baby boomer generation who are screwing them financially. Rather than that I'd like to see some sensible balance in lending policies, as opposed to allowing the irresponsible, greedy, and incompetent banks to call all the shots and get one over on society yet again. Free market policies don't work with ruthless cartels that operate purely for their own benefit.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
Thrugelmir wrote: »
Gifts can cause issues with depreviation of assets in later life for the parents. Nothing new in this so can't be blamed on the current crisis.
What on earth do you mean? Are you referring to means testing for old age care? There are simple ways to get round this by using a trust.0 -
GeorgeHowell wrote: »Rather than that I'd like to see some sensible balance in lending policies, as opposed to allowing the irresponsible, greedy, and incompetent banks to call all the shots and get one over on society yet again. Free market policies don't work with ruthless cartels that operate purely for their own benefit.
Time has moved on. The events of the crash are over 4 years ago. All the major banks have new management. Not just at board level. But risk managers etc. The ethos is changing in the banks.
Lending policy is tightening in a sensible manner. This will take time to filter through and impact the property market.0 -
GeorgeHowell wrote: »
A guarantee cannot be with reservation, but that's the point because not all parents can afford to take such a risk with their own assets, and some call on the property would resolve it in some cases.
In that case why should the lender?
It's the difficulty of raising the deposit unaided.
Save in earnest and limit consumption?
Free market policies don't work with ruthless cartels that operate purely for their own benefit.
But money is available if prudent criteria are met according to posters here.
Capital adequacy rules were relaxed and look what happened to a barely regulated free market. It could not be allowed to continue. In reality the sane, tried and trusted regulatory frame of eons past is being reinvented.
Decades of flat lining to come especially when higher student fees are taken into account.
The property dream needs sacrifice and always had before madness prevailed."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Yes please, my mortgage lender accepts credit card payments if you are in arrears - I could make 6k cashbackgrizzly1911 wrote: »Seems common sense to me.
No doubt those on IO who can't upgrade to one with some form of repayment will classed as in arrears and they will be managed as such. I think....0
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