Windfall fears for over 1m interest only mortgage holders

LydiaJ

IveSeenTheLight wrote: »

I'd most likely have to go into a conventional rental home as opposed to renting from the bank.
This is because the lenders wouldn't have the security once in retirement.

So I'd end up in the same position as other renters BUT, with the HPI "windfall"

Surely you understand this now GD

I think Graham does understand that an IO buyer is better off than a renter. He is trying to point out that the IO buyer has got used to "owning" and has much higher expectations than a renter.

Do you actually know anyone on an IO mortgage who's perfectly happy to move into rented at the end of the term? I don't.

IveSeenTheLight

Mallotum_X wrote: »

Presumably you understand why those likely to be in this situation are concerned, which was what the report out this morning referred to. Losing your home and getting some money will not be seen as a good position to be in.

I'm not stating it would be a good position.

I've yet to see an argument point that it's worse than conventional renting over the same period.

I recently changed my repayment BTL's onto Interest only for a couple of reasons.
One of which is to rapidly pay down my own mortgage

That said, If I choose to and was able to keep these on interest only for the next 25 years without a repayment vehicle, would I be concerned with having to sell the property to repay the mortgage.

Probably not when I've made years of rental profit and have HPI as a bonus when leaving the BTL investment.

IveSeenTheLight

LydiaJ wrote: »

I think Graham does understand that an IO buyer is better off than a renter. He is trying to point out that the IO buyer has got used to "owning" and has much higher expectations than a renter.

Do you actually know anyone on an IO mortgage who's perfectly happy to move into rented at the end of the term? I don't.

This is a different argument point to the OP's thread.

I don't know anyone in this position, hence my hypothetical example.

Recently, we've been discussing a position from a poster called lagoon, who expressed they have no desire to buy because they can;t afford the repayments.

This may have been an option to them in the past.

ILW

Mallotum_X wrote: »

Presumably you understand why those likely to be in this situation are concerned, which was what the report out this morning referred to. Losing your home and getting some money will not be seen as a good position to be in.

Better than losing your home (end of tenancy) and having no money though.

Mallotum_X

ILW wrote: »

Better than losing your home (end of tenancy) and having no money though.

Do you think those affected will see it that way?

IveSeenTheLight

LydiaJ wrote: »

Do you actually know anyone on an IO mortgage who's perfectly happy to move into rented at the end of the term? I don't.

I wonder how many divorced couples who had bought but then end up in rented.
Maybe not IO, but certainly buyers who may end up in rented accomodation.
I think PN may be a poster in that scenario

Is this any real difference?

As I said before, IO mortgages provided those who may not have been able to afford to repay capital and Interest a way of renting at financially better terms and improved security of tenure.

ILW

Mallotum_X wrote: »

Do you think those affected will see it that way?

That is their problem, they got no more or less than what they paid for. "Interest Only" is not exactly a misleading term.

GhIFA

Graham_Devon wrote: »

For the buyer, they didn't want to rent. They wanted to buy. They will not be expecting to lose their house at the end of paying for it for 25 years. They may have to go bankrupt in some cases.

They have had 25 years to put in place some kind of repayment strategy. If they get to the end of the 25 years without having taken any action to address any shortfall then they unfortunately have no-one to blame but themselves.

Graham_Devon

IveSeenTheLight wrote: »

I'd most likely have to go into a conventional rental home as opposed to renting from the bank.
This is because the lenders wouldn't have the security once in retirement.

So I'd end up in the same position as other renters BUT, with the HPI "windfall"

Surely you understand this now GD

Right.

But this isn't a windfall is it.

It's situation where your life will have to adjust immensly, where you may, dependant on circumstances and how far it went, have adverse credit records and difficulty following on from that when going through rental checks.

Why dress it up as anything else? Especially a "good thing" as that is what a windfall is usually described as.

Graham_Devon

GhIFA wrote: »

They have had 25 years to put in place some kind of repayment strategy. If they get to the end of the 25 years without having taken any action to address any shortfall then they unfortunately have no-one to blame but themselves.

Yes I know. I follow this sentiment myself. I'm often descirbed as wanting to see people reposessed....funnily enough by Hamish who in this instance describes it as a windfall!