Windfall fears for over 1m interest only mortgage holders

HAMISH_MCTAVISH

more than a million people "renting from the bank" with interest-only mortgages face a financial windfall when their "rental term" expires, a financial watchdog has warned today.

Some 2.6 million uk householders have the mortgages but the financial conduct authority said estimates suggested that nearly half would not have savings or other funds to cover the final bill, meaning they'd either have to switch to a repayment mortgage or sell the house and pocket the equity before buying or renting somewhere else.

The average windfall is £90,000, according to fca research.

Lenders will now step up warnings to prevent other people being allowed to "rent from the bank" at such advantageous terms in future.

A spokesman for mortgage lenders said, "this just isn't good enough, these people could have been renting from a private landlord to which we would have charged a higher btl rate.

Instead, we've stupidly allowed them to rent from us, at an inflation proofed low rate for many years or even decades. And to add insult to injury, they've built up all that lovely equity and we can't get our greedy little fingers on it.

Thankfully, the fsa has given us an excuse to effectively ban these products, so no more great deals to "renters" from us."

..........

Graham_Devon

So basically, you exchange your roof for this "windfall"!?

You know how to spin Hamish dear boy! Labour may be interested...

michaels

Unlike those who rent who are just given a whole property after 25 years rather than just some proportion? There are a lot more renters than IO mortgage holders, shouldn't we worry about them first?

Graham_Devon

michaels wrote: »

Unlike those who rent who are just given a whole property after 25 years rather than just some proportion? There are a lot more renters than IO mortgage holders, shouldn't we worry about them first?

Renters will be covered by housing benefit.

HAMISH_MCTAVISH

Eh?

What are you on about Graham?

HAMISH_MCTAVISH

Graham_Devon wrote: »

So basically, you exchange your roof for this "windfall"!?

And how many renters get a 90K windfall when they move house?

Rent from a landlord, it'll cost you massively more than an interest only mortgage over the years, and they benefit from HPI instead of you.

Rent from the bank, and over 25 years it'll cost you a fraction of what market rents would, and you benefit from HPI instead of the landlord.

This really is a storm in a teacup.

These people are far better off buying on I/O than they would have been renting over the 25 year term of a mortgage.

Yes, they'd have been better off still buying on repayment mortgages, but if the choice is buy on I/O or rent, only a fool would choose to rent.

IveSeenTheLight

HAMISH_MCTAVISH wrote: »

only a fool would choose to rent.

There are times in life when you may choose to rent.

I am renting at the moment, it pains me, but it was part of the criteria as I build my own home.

Graham_Devon

HAMISH_MCTAVISH wrote: »

And how many renters get a 90K windfall when they move house?.

Hamish, are you being serious?

You are seriously going to sit there and classify someone who's just lost their home through a reposession is actually the beneficiary of a windfall?

I cannot compete with that level of idiocy. You WILL win the argument on this one if those are your true beliefs and how you want to spin it.

Seems others are happy to fall to this level of idiocy too though. I thought it was just a joke if I'm honest, though it appears you are serious.

black_taxi_2

guy on bbc site

interest only mortgage

"im worried i owe £188k when my term finishes"

maybe its because you bought a big house bud

HAMISH_MCTAVISH

Graham_Devon wrote: »

Hamish, are you being serious?

You are seriously going to sit there and classify someone who's just lost their home through a reposession is actually the beneficiary of a windfall?

I cannot compete with that level of idiocy.

Graham, are you being serious?

You are seriously going to sit there and insinuate everyone who has an interest only mortgage will be repossessed? Instead of just selling and being the beneficiary of a windfall?

I cannot compete with that level of idiocy.:(

Graham_Devon

HAMISH_MCTAVISH wrote: »

You are seriously going to sit there and insinuate everyone who has an interest only mortgage will be repossessed? Instead of just selling and being the beneficiary of a windfall?

I cannot compete with that level of idiocy.:(

You don't have to compete. You have just randomly made this up.

A forced sale....whether by reposession or facing up to and being forced to sell before the repo.....either way, it's not a windfall. Only a complete tool would try and convince themselves and others of this.