Interest only mortgages

dimbo61

The Bean counters are taking over the banks and " Your friend" may well find he will have to pay for a Valuation of his BTL property soon!!
The banks( Bean counters/FSA/FCA) want to know how exposed the lenders are as valuation are "stale" after 2/3 years.

BobQ

dimbo61 wrote: »

The Bean counters are taking over the banks and " Your friend" may well find he will have to pay for a Valuation of his BTL property soon!!
The banks( Bean counters/FSA/FCA) want to know how exposed the lenders are as valuation are "stale" after 2/3 years.

Mmm. They will be selling endowment policies soon! Is their focus on interest only mortgages or do repayment ones get this scrutiny too?

holly_hobby

BobQ wrote: »

Mmm. They will be selling endowment policies soon! Is their focus on interest only mortgages or do repayment ones get this scrutiny too?

No, clues in the title ...

A repayment mortgage has both the capital debt and interest repaid over the mortgage term, so at the end of the term there is zero outstandng (if of course there are no arrears etc), so in that case there clearly isn't the concern of the mge ending, with an large os mge sum and no independent means or plan to repay it by the mortgagor .....

I've already discussed the issues re IO mges and the reason for questioning, its an FSA (now FCA) requirement that all lenders assertain re their residential IO mge book, how in each case the mortgagor intends to repay the debt.

I wouldn't actually label it scrutiny (whilst the FSA/FCA remit doesn't actually extend to commerical borrowing), in fact many would call it responsible lending no matter what the basis of borrowing. Anyhoo regardless of whether you/your friend agree or not, if the lender has asked how you intend to repay the mge debt (which you do appear to have a plan) then of course you must tell them - I'm at a loss as to why its so difficult and underpinning such on going anxious posts.

Hope this helps

Holly x

BobQ

holly_hobby wrote: »

..........I'm at a loss as to why its so difficult and underpinning such on going anxious posts.

Hope this helps

Holly x

Holly, my last post was intended as a joke!:) What I meant was that if after several years they are suddenly concerned how they will get their money back and how exposed they are (as dimbo61 said) maybe they will want to revert to some formal means of getting their money back like assigning a savings vehicle to it. After all endowments were so successful for this (irony!)

Thanks again for the advice.

Thrugelmir

BobQ wrote: »

What I meant was that if after several years they are suddenly concerned how they will get their money back and how exposed they are .

There's around £400 billion of debt to be repaid. In 2012 the average interest only mortgage coming to the end of its term was £53,000. Beyond 2020 this will rise to £150,000. Those in the future may well not benefit from the rise in property prices that people are now.