Windfall fears for over 1m interest only mortgage holders

wotsthat

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.

They'll have saved a bundle on renting over 25 years and will have £90k in their back pocket.

...and we're meant to worry that they won't be perfectly happy?

wotsthat

Graham_Devon wrote: »

I'm not looking at whether they were right or wrong to buy. I am looking at the descriptive use of calling this situation a windfall. It's anything but.

If we called it a 'large lump sum' instead of a 'windfall' would it help?

LydiaJ

wotsthat wrote: »

They'll have saved a bundle on renting over 25 years and will have £90k in their back pocket.

...and we're meant to worry that they won't be perfectly happy?

No, we're not supposed to worry that they won't be perfectly happy. I think it would be as well for us to be realistic about whether they will regard themselves as having received a windfall.

Graham_Devon

wotsthat wrote: »

If we called it a 'large lump sum' instead of a 'windfall' would it help?

Yes. It radically changes the description of what it actually is. You wouldn't choose to describe a wake as a party. You woudn't choose to describe going bankrupt as choosing freedom. So why describe not being able to afford your own house as a windfall!?

All you'll need to do is accept that people, in general, do not choose to rent for 25 years privately.

That's the other problem with comparing IO owners to this mythical bunch of people who have chosen that path.

The argument is that the IO owner is better off than someone who chose to rent. But my counter argument would be how many, in reality, have chosen to rent for life?

The IO owner chose to go that way.

ILW

Graham_Devon wrote: »

Yes. It radically changes the description of what it actually is.

All you'll need to do is accept that people, in general, do not choose to rent for 25 years privately.

That's the other problem with comparing IO owners to this mythical bunch of people who have chosen that path.

The argument is that the IO owner is better off than someone who chose to rent. But my counter argument would be how many, in reality, have chosen to rent for life?

The IO owner chose to go that way.

They chose not to pay for their house by going IO though.
Most people do not expect to own something without paying for it.

Graham_Devon

ILW wrote: »

They chose not to pay for their house by going IO though.
Most people do not expect to own something without paying for it.

Whats that got to do with calculation vs renters though?

I agree with everything you are saying on here ILW. BUT, it's of little relevance to the point being made.

Only Lydia appears to get my point. Not sure if I've explained it badly or something. I've not backed anyone on IO up or suggested anything other than describing it as a windfall puts a radically misleading spin on what it is.

My parents went through this. They didn't want to move but had to.

They certainly wouldn't have described their scenario as a windfall. It was, through unknown circumstances (dad is now disabled) that they found they would never be able to pay the mortgage as it was IO.

They sold it for a LOT more than the mortgage they had left on it. BUT, they had to buy somewhere else.

At the end of the day for them, the money meant nothing. The upheavel of leaving the house they wanteds to live in, in the place they wanted to live in was very stressful and emotional.

As I say, ask anyone in the situation (regardless of whether they have got to default point) whether they see it as a windfall.

Windfall:
wind·fall

A piece of unexpected good fortune, typically one that involves receiving a large amount of money.

GhIFA

Graham_Devon wrote: »

So why describe not being able to afford your own house as a windfall!?

I would argue that the mentality of the person who has allowed themselves to get to the end of the mortgage term making no provision to repay the outstanding capital is such, that they probably would see it as a windfall. They've demonstrated for the entire term of the mortgage that the money in their pocket is more important than the roof over their head, so are unlikely to radically change that viewpoint at the end of the term.

GhIFA

Graham_Devon wrote: »

it's of little relevance to the point being made.

Neither is bringing repossesions into the equation.

wotsthat

Graham_Devon wrote: »

Yes. It radically changes the description of what it actually is. You wouldn't choose to describe a wake as a party. You woudn't choose to describe going bankrupt as choosing freedom. So why describe not being able to afford your own house as a windfall!?

All you'll need to do is accept that people, in general, do not choose to rent for 25 years privately.

That's the other problem with comparing IO owners to this mythical bunch of people who have chosen that path.

The argument is that the IO owner is better off than someone who chose to rent. But my counter argument would be how many, in reality, have chosen to rent for life?

The IO owner chose to go that way.

I really don't care whether they're happy that they've had 25 years cheap digs, or happy that they've managed to trouser £90k, or unhappy that they'll have to repay their debts or sell.

I couldn't care less that they intended to buy but didn't.

I don't care if we call £90k a 'windfall', 'lump sum', '11 years rent' or whatever.

It's the choices we make that define our circumstances. Choose not to repay a mortgage and you'll find that choices start to be limited.

LydiaJ

Maybe you don't care about these things. But the point of the thread was that Hamish was recasting the BBC article to describe what happens at the end of an IO mortgage (to a person with no repayment vehicle) as a windfall. So that's the thread topic.