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Why do I have to pay off my mortgage?

c7borg · 2013-08-14 09:16:02

We decided to have an interest only mortgage years ago, the reason being that we have a 1/3 equity (and rising) in the property and are happy that will be enough to downsize when the retirement comes. So why is it the banks are obsessed with finding out what our repayment vehicle is? The answer is we don't want to pay it…

Comments

Thrugelmir Posts: 89,546 Forumite

14 August 2013 at 1:04PM

amnblog wrote: »

Why would a lender want the amount lent to keep reducing and their interest and profit with it.

Because it's the most cost effective and profitable way of administering mortgages.

Repayment of capital allows lenders to advance to new customers. Thereby decreasing risk.

Lastly, there's insufficent retail deposits within the banking system to fund mortgages on an interest only basis.

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