Two banks to offer interest only mortgages again

CLAPTON

OffGridLiving wrote: »

As I suggested in my last post, I'm not about to try and explain how companies finance themselves through shares and bonds, there are plenty of resources online to learn from if you want to know more about corporate finances.

As to your other point. If banks were lending normally, then we wouldn't be discussing a couple of banks providing IO mortgages. All the banks would be and so it'd actually be bizarre to comment on a normally functioning banking sector.

I'm not sure what you consider 'normal' bank trading but if you mean it isn't like 2006/7 then let's be grateful for that.

I see no economic logic in hypothecating your spending and investment decisions but if you understand about the economic effects of buying stocks, shares, bonds etc one would expect you to do so.

OffGridLiving

Loughton_Monkey wrote: »

But this was originally raised in the context of buying ISA and pension funds. However much goes into these, I wouldn't call it "help" for business unless we are talking about a new issue. These probably account for 0.001% of each day's trading.

You can buy corporate bonds in ISAs and pensions. I had about £40k's worth in my pension - though I sold them all recently as I believe that they have maxed out and that the bubble will burst once QE is officially ended. Not long now with all the positive economic news in the US, Europe and UK.

OffGridLiving

CLAPTON wrote: »

I'm not sure what you consider 'normal' bank trading but if you mean it isn't like 2006/7 then let's be grateful for that.

I see no economic logic in hypothecating your spending and investment decisions but if you understand about the economic effects of buying stocks, shares, bonds etc one would expect you to do so.

You're building a bit of a strawman here by mentioning 2006/7, because I certainly didn't. IO mortgages have been available since at least the 1970s. They are not available/difficult to obtain now 'for some reason'. I'll let you figure out what that reason is.

I've no idea what you're on about with your second paragraph and so cannot comment. If you're saying that you still don't understand about corporate investment and can't use google to find out, then here's a bit of help:

http://en.wikipedia.org/wiki/Corporate_bond

"A corporate bond is a bond issue by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business."

http://www.theguardian.com/money/2001/jul/18/shares.investinginshares1

"Why companies want to please shareholders

The simple answer is that "floating" - selling shares in their companies to anonymous investors - raises millions of pounds to allow those same companies to expand into bigger and hopefully better businesses."

System

Cornucopia wrote: »

Moot point.

Yes that was my point.

OffGridLiving

Joeskeppi wrote: »

Yes that was my point.

It was a moot point and cornucopia's should have been a mute point.

michaels

OffGridLiving wrote: »

I was forced to get a repayment mortgage when I remortgaged a few months back. My monthly mortgage payments have doubled and so I have had to vastly reduce the amount of money going into my pension and ISA funds. Graham and co were moaning just the other week that too much money is being used to service mortgage debt, and we should be investing more in shares/funds/company bonds to boost industry. This is something I agree with and was doing, but the withdrawal of IO mortgages has stopped that. All the money that used to go into shares in my ISA, benefitting many companies now goes to the bank in repayments, benefitting one.

Reno I had to shop around but got an IO from Santander on the vague promise that 'downsizing' was my intended repayment vehicle - 5 year fix at 2.49% so it is possible.

Perelandra

chewmylegoff wrote: »

Haven't first direct been offering interest only offset mortgages throughout the financial crisis?

.. and very happy I am with it too.

OffGridLiving

michaels wrote: »

I had to shop around but got an IO from Santander on the vague promise that 'downsizing' was my intended repayment vehicle - 5 year fix at 2.49% so it is possible.

I was with Santander with my previous mortgage and they told me that unless I came off IO, then the only mortgage they could let me have was at 4% (this is May 2013).

When did you arrange your mortgage? 2.49% fixed for 5 years is a great rate, do you mind if I ask what the arrangement fee was?

michaels

OffGridLiving wrote: »

I was with Santander with my previous mortgage and they told me that unless I came off IO, then the only mortgage they could let me have was at 4% (this is May 2013).

When did you arrange your mortgage? 2.49% fixed for 5 years is a great rate, do you mind if I ask what the arrangement fee was?

I think it was 1395 but free legals and valuation and they wanted to add the fee to the loan even though it took me over the 50% ltv which is their max for IO (I think you can go over 50% LTV but only the bit below 50% LTV can be IO). Wierdly all sorts of sensible repayment vehicles like pension lump sum and cash isa were not considered acceptable but 'downsizing' was.

OffGridLiving

michaels wrote: »

I think it was 1395 but free legals and valuation and they wanted to add the fee to the loan even though it took me over the 50% ltv which is their max for IO (I think you can go over 50% LTV but only the bit below 50% LTV can be IO). Wierdly all sorts of sensible repayment vehicles like pension lump sum and cash isa were not considered acceptable but 'downsizing' was.

I looked at IO mortgages with other lenders and the amount of hoops I would have to jump through with providing pensions forecasts, ISA returns and other details that I just decided to give up and go with repayment.

It's odd that I wasn't offered anything with Santander, all I can think is that they didn't offer your deal to existing customers, or the deal wasn't available when I was looking in May?

Well done though for getting 5 more years on IO. By the time that period expires we'll hopefully have returned to sensible lending practices where minimum wage 20 something kids at call centres don't try lecturing wealthy 40 something adults on how to manage their money.