what going on here with 30 year mortgages

crofty

Borrowers warned over 30-year mortgages

Lenders will find it 'difficult' to show forbearance to older borrowers on long-term mortgages who fall into financial difficulty, Bank of England says



http://www.telegraph.co.uk/finance/personalfinance
/borrowing/mortgages/10970290/Borrowers-warned-over-30-year-mortgages.html

just seen it on facebook about 30minutes ago and trying to get my head around it. I will never be in the market for a mortgage i hope. unlikely to ever work again with my disability so will relay on the state to house me in some fashion does look like i may live out the last 10/15years of my life in a tent at the rate things are going.

mark

ViolaLass

What's tricky to understand about it?

crofty

trying to understand who is at fault here. is the banks up there old tricks again? is it something the bank of england has caused? or is it just a mixture of all elements of the broken housing market?
should the current buyers be worried about what is going on? there is a generation that will never own there homes maybe not a bad thing from my position at the bottom of the ladder.
hate to think how much my walk in shower cost to fit and the pump alway seems to be having some sort of problem but that is unique issue to being disabled and not able to use a normal bath.

kingstreet

A mortgage today is typically written to end before the borrower's 67th or 68th birthday. The only way a mortgage is allowed beyond that is because evidence of income in retirement can be provided.

ViolaLass

It isn't a whole generation, it's some buyers who may struggle to get a mortgage for as long as they want. If you buy a house and have a plan for paying the mortgage off rather than just hoping for the best and then being shocked when the bank want all their money at the end, you'll be OK (roughly speaking).

I'm not clear how this story relates to your disabilities.

Wh05apk

A simple (partial) solution would be to allow borrowers to switch onto a "lifetime" interest only mortgage as a fall back if the interest only payments were affordable, however lenders won't allow this, as the current view seems to be anything beyond retirement age is a mis-sell, so if the term cannot be extended then they have no option than to ask for repayment of the mortgage.

crofty

it does not relate to my disability , i am just trying to understand what others are going threw would be planning or have a mortgage. Also something to keep my brain active and doing something too understand the outside world.

crofty

so if there still say 20% of the mortgage to pay for the customer at there 67/68th birthday , the banks would ask for that 20% in full or offer some other sort of loan to pay off the reminder of the mortgage?

ACG

No, the lender will honour whatever was agreed. So if the original term went to 70 or 75 they will honour it. If it did not, then they would look to work with the customer but in certain circumstances it could be calling in the loan. Most people at 67/68 will have a pension of some sort which will allow a cash lump sum.

Sometimes 30 year mortgages are all that the lender will lend due to affordability. In reality, peoples income will go up and the mortgage will come down so over time (assuming they do not move to keep it simple), they would be able to slash years off the mortgage by overpaying.