Nearly one million face mortgage difficulty.

Running_Horse

Due to being on interest only deals with no means to repay the capital.

http://www.bbc.co.uk/news/business-34144333

Serves them right. It's not like the endowment issue where people had no idea of future problems. They chose to borrow more with no means of repayment, and helped push up prices for those of us who live within our means.

chucknorris

Running_Horse wrote: »

Due to being on interest only deals with no means to repay the capital.

http://www.bbc.co.uk/news/business-34144333

Serves them right. It's not like the endowment issue where people had no idea of future problems. They chose to borrow more with no means of repayment, and helped push up prices for those of us who live within our means.

There isn't anything wrong with interest only loans, I've never had a repayment loan (although I have bought for cash a couple of times), it doesn't mean that I wanted to borrow more, its just that I reckoned I didn't feel the need to repay the loans during the life of the loans. Of course anyone who is either financially illiterate or a bear, should probably get a repayment loan as it avoids the need to financially plan or simply the worry about having a loan hanging over you (if you are that way inclined).

I suppose though that someone has to protect the idiots from themselves and and/or careless greedy lenders who don't care about their customers.

redmalc

I cannot belief the way this is being reported on the TV,they are asking what can be done for these people ?.
Well if they are that stupid not to have an investment to repay the capital part of the loan they deserve what is coming their way.
I can remember my parents struggling to pay their endowment for years to enable them to pay the capital,and it did

worldtraveller

chucknorris wrote: »

Of course anyone who is either financially illiterate or a bear...

..And there lies much of the problem today (and in the future of course in this particular issue), IMHO. In todays "Me, me me. I want it and I want it now and don't care how I get it" society it is indeed a financial timebomb just waiting to go off for a lot of people, just as it is for many of those that believe that interest rates will always be at the levels that they are today and have factored in little, or nothing in their repayments.

worldtraveller

redmalc wrote: »

I can remember my parents struggling to pay their endowment for years to enable them to pay the capital,and it did

...and, like myself, with interest rates at times which were probably, also for them, over 16%!

racing_blue

I have an IO mortgage & can definitely see the trap. It is so tempting to defer saving because life is expensive right now. Trouble is, 25 years becomes 20 years becomes 15 years and life is no less expensive. But the saving schedule becomes more and more unrealistic.

I wonder how this will unfold? As they say, if you owe a pound and can't pay, you have a problem. If you owe a million pounds and can't pay, the bank has a problem.

Mistermeaner

racing_blue wrote: »

I wonder how this will unfold? As they say, if you owe a pound and can't pay, you have a problem. If you owe a million pounds and can't pay, the bank has a problem.

But you can repay by the giving the bank the house back (that was never yours anyway)

racing_blue

But if a million people owe the banks and won't be able to pay, society has something of a problem on the horizon perhaps.

wotsthat

racing_blue wrote: »

But if a million people owe the banks and won't be able to pay, society has something of a problem on the horizon perhaps.

From the CML in 2014

https://www.cml.org.uk/news/press-releases/3890/

Reassuringly, there has also been a positive set of changes in the loan-to-value profile of outstanding interest-only mortgages. Two-thirds of outstanding interest-only mortgages have loan-to-value (LTV) ratios of less than 75% - and the vast majority of these are not due to mature until after 2020.

Anyone with an IO due to be repaid before 2020 has been contacted and asked how they'll repay it. One of those options was to sell.

There's no problem for society when someone sells a house to repay the bank and pocket 25% of the sale price.

Citizens advice are talking their own book.

Mistermeaner

No. Either they continue to pay the interest which is effectively rent or the bank repossesses and either rents it back to them or someone else or sells it to someone who can afford it.

Rightly there should be no special social safety net

michaels

Meanwhile 10 million plus renters have no housing equity at all time bomb!

Unfortunately my decision to borrow against my house IO and make a profit by saving the money at a higher rate and the 1500pa I make by doing so is apparently a financial mistake which I need to be protected against.

After all who wins from IO, the occupier who over the 25 year term is very unlikely not to earn at least some equity given the house building record of the UK or the btl landlord who has been outbid on the property and is thus not able to make a profit plus benefit from hpi by renting the property to the person who would have bought IO had they been allowed to but are instead forced to pay more than the interest per month as rent...