MSE News: Interest-only mortgage timebomb warning: act now

shortchanged_2

jamesd wrote: »

Sure, page 52, components of the repayment strategies used:

32% Endowment policy
28% Other savings
21% Downsizing
20% ISA, either type
18% Overpayments
14% Change to repayment
11% Pension (lump sum)
10% Investments outside ISA
9% Inheritance
9% Selling and not buying elsewhere
8% Selling other property
8% Change mortgage type
5% Cannot afford to pay off
3% Selling other assets (land, gold etc)
1% Selling business
3% Other
7% Don't know

Of which 50% are probably lying.

Thrugelmir

GhIFA wrote: »

I am no "HPI Nutter" as some choose to describe others on this board. The housing market is by no means perfect, however, this report clearly shows that the situation is not as dire with interest only mortgages as is often made out. For some reason the FCA has taken a more negative tone in its publication of the report than is actually suggested through the report itself.

Maybe that's because the FCA is looking down the road so to speak. Shaking the tree now will create awareness and hopefully start a change in attitude for some. The concern will be the rump of borrowers who already overcommitted with debt.

patchwork_cat

Interest only mortgages have their place. I wish we had thought about them 10 years ago, we have a fixed offset now and we would have been in a better situation had we had one 10 years ago.

Pincher

This is terribly de ja vu.
Didn't we talk about this on MSE before?

So FCA thinks their job is to play Cassandra and cry disaster is coming, but they can't do anything, instead of regulating something.

Fine somebody, confiscate their Cayman Island bank account.
Paint them with fox colours and scent them with fox odours, so they can play hunt the banker in the country side instead of fox hunting.

Thrugelmir

Pincher wrote: »

So FCA thinks their job is to play Cassandra and cry disaster is coming, but they can't do anything, instead of regulating something.

There's far wider issues and implications to this matter than just this report.

This will pre-empt any mis-selling claims or possession issues in the future as well. As onus is firmly being placed on each individual borrower to act.

anon_ymous

This is all very confusing to me. What's the difference between "Interest only" and other mortgage types? I've never had a mortgage before, and Im a bit confused

Thrugelmir

waqasahmed wrote: »

This is all very confusing to me. What's the difference between "Interest only" and other mortgage types? I've never had a mortgage before, and Im a bit confused

MSE has its very own guide.

http://www.moneysavingexpert.com/mortgages/mortgage-guide

Mike_J

The only thing that I found "news worthy" about this news was that people in this country are really that stupid !!!! You borrow money for 25 years and only repay the interest. OK, thats 25 years notice you have that you have to pay the debt off!!!!! I purchased my house in the late 1980s as a young inexperienced 20 year old. I remember to this day sitting in the room at the bank and being told....endowment is the way to go, it will pay off your mortgage and it will give you about the same in savings. Back in those days this was seen almost like a promise (backed up with the fact that I later got comp for being mis-sold it)

Yesterday i paid £2300 to the bank to pay off the final bit of of the shortfall (after previously using the £2500 i got from being mis-sold the endowment against it as well).

Mortgages coming up short has been big news since those days of endowments. (Most) financial institutions have bent over backwards to ensure they dont get caught out again for misselling. Common sense says if you borrow money you will have to pay it back.

WHY WHY WHY WHY WHY are some people now claiming "i never thought of that!".

(I havent saved up for a family holiday this year eventhough I knew that we have 3 months called summer. Will the news papers right about that?)

Pincher

I wonder what the worst case scenario is.

Buy at the peak in 2007 for £500k. 100% LTV 5 year fixed at 6.25% Interest Only. Coming out of fixed rate in 2012, and pay 5% SVR due to high LTV. House now worth £450k, so cannot sell, and cannot re-mortgage.

Conspiracy theory. The lenders are secretly preventing voluntary enthanasia becoming legal, because the borrowers will just pop some pills and hop it.

ViolaLass

Pincher wrote: »

I wonder what the worst case scenario is.

Buy at the peak in 2007 for £500k. 100% LTV 5 year fixed at 6.25% Interest Only. Coming out of fixed rate in 2012, and pay 5% SVR due to high LTV. House now worth £450k, so cannot sell, and cannot re-mortgage.

Conspiracy theory. The lenders are secretly preventing voluntary enthanasia becoming legal, because the borrowers will just pop some pills and hop it.

That's suicide and it's not illegal.