Nearly one million face mortgage difficulty.

Generali

N9eav wrote: »

My sis in law did the same. £60,000 interest only. 8 years to go and still owes £60,000.


So she just had the house valued at £289,000. I think you can do the maths.... Later this year she will be in a new house with no mortgage....


I guess it does not work for everyone, but that was the idea for some

Was the first (current) house very low LTV or has the first place almost quintrupled in value over the last 8 years?

ukcarper

Generali wrote: »

Was the first (current) house very low LTV or has the first place almost quintrupled in value over the last 8 years?

I thought that at first but it say 8years to go so would have been in house 17 years if 25 year mortgage.

Ronaldo_Mconaldo

Gavin234 wrote: »

So in your opinion none of these ticking time mobs will ever be a problem?

These interest only people will just find the money from somewhere just in time, right?

They'll find it when they sell the house?

roger10

chucknorris wrote: »

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.

I agree with the statement entirely and it does need someone to protect the illiterate (which i once was but still not completely literate). Those hard working people who were cajoled into this are the ones I feel sorry for and some did it for money (which I didn't feel sorry for). Now that house prices have picked up again lenders are unwilling to loan them money to get away from it, even with equity which begs the question of "why?" when they loaned them the money in the first place. In those instances lenders should be forced by the government. On the other side those who had the chance to earn some money and to pay some capital but didn't save, those I don't feel sorry for....as much.

the_flying_pig

the mid noughties explosion of IO was stupid, shambolic, pathetic, damaging [given the part it played in fuelling inflation], take your pick really from the dozens of appropriate adjectives. there's nothing wrong with it per se, like many things there's a place for it,but should always have been limited to a minority of borrowers [e.g. representing an awful lot less than 5% of new lending, rather than around a third of it or whatever absurd proportion it'd crept up to by 2007].

my first criteria for rationing it would have been to limit it to people who had at least a rudimentary understanding of what it was that they were signing up for. I'm sure that'd have brought it down to perfectly sensible proportions.

given that we are where we are in 2015 I think, pff, I dunno really.

michaels

the_flying_pig wrote: »

the mid noughties explosion of IO was stupid, shambolic, pathetic, damaging [given the part it played in fuelling inflation], take your pick really from the dozens of appropriate adjectives. there's nothing wrong with it per se, like many things there's a place for it,but should always have been limited to a minority of borrowers [e.g. representing an awful lot less than 5% of new lending, rather than around a third of it or whatever absurd proportion it'd crept up to by 2007].

my first criteria for rationing it would have been to limit it to people who had at least a rudimentary understanding of what it was that they were signing up for. I'm sure that'd have brought it down to perfectly sensible proportions.

given that we are where we are in 2015 I think, pff, I dunno really.

So all those people who you would have denied the chance to purchase IO and forced them to rent...how many of them would be better off today?

missyrichards

How exactly did people not understand that they were taking on a debt that they will have to pay back?

Thrugelmir

mayonnaise wrote: »

Ah, another ticking timebomb.
I could dig up threads a decade old warning about this same ticking timebomb, but I won't because Graham will tell me off.

The residue of NRAM's mortgage book has been a known fact for many years. The problem doesn't come to roost until after 2020. When the balances outstanding for redemption increase markedly.

CLAPTON

Thrugelmir wrote: »

The residue of NRAM's mortgage book has been a known fact for many years. The problem doesn't come to roost until after 2020. When the balances outstanding for redemption increase markedly.

is the amount of equity in the assets known too?

Thrugelmir

CLAPTON wrote: »

is the amount of equity in the assets know too?

Last report I saw showed high LTV across the interest only mortgage book. Around the 80% level for residential and higher for BTL. Though prices have increased since then so there's a little relief. Problem is more the quality of the individual borrowers themselves. As are trapped by the implementation of last years Mortgage Market Review.