Interest-only mortgages expiring

jimbog

penguingirl wrote: »

We were struck by how much more vigorous the bank were in checking we understood it. In total we had about 5 hours of telephone appointments to go through it with a fine tooth comb, and this was to port it to a lower LTV and our salaries had pretty much doubled in the 6 years! They were very keen to check we discussed repayment vehicles and wanted us to be explicit in our plans.

How times have changed. In 1987 I had to fight to get a repayment mortgage as every bank or building society I visited would only seem to offer endowment mortgages - being so fixated on their commission.

It was only a chance read of a Which report back in '87 that stressed that there was no guarantee the loan would automatically be repaid at the end of the term that gave me the jitters (most banks and building societies raved how it would be a certainty there would be shed loads of cash left over). I remember work colleagues at the time thinking I was absolutely mad

Rosemary7391

jimbog wrote: »

How times have changed. In 1987 I had to fight to get a repayment mortgage as every bank or building society I visited would only seem to offer endowment mortgages - being so fixated on their commission.

It was only a chance read of a Which report back in '87 that stressed that there was no guarantee the loan would automatically be repaid at the end of the term that gave me the jitters (most banks and building societies raved how it would be a certainty there would be shed loads of cash left over). I remember work colleagues at the time thinking I was absolutely mad

Where my home is concerned, I'd rather plod along with something that will do the job so long as I keep up my end of the bargain. It's up to me then!

exiled_red

jimbog wrote: »

I teach business studies to 16 to 18 year olds and while personal finance isn't part of the syllabus (as yet) I always include it where I can.

What is remarkable is how most have absolutely no knowledge of basic personal finance and how they all sit up and pay attention when I do so (even coming off their phones :eek: )

That sounds really good.

I often wonder why more isn't done to incorporate these types of life skills into subjects such as maths or computing. How difficult would it be reword some maths questions to teach kids something as basic as compound interest or to make spreadsheets in computer classes that have some relavence to something financial that they will encounter later in life. If they can see some potential use in the problems they are doing maybe that will improve their performance in these subject as well as giving them as basic foundation in 'life skills'. I remember so many of the problems I did in these subjects at school having no use whatsoever and I say that as someone who liked these subjects so I can only imagine how pointless some of the other kids must have found them.

FBaby

When I got my first home, it was on a 100% borrowing and interest free for three years. It certainly was great, although interest was higher. At the time, we had two young children at nursery and no tax credits, so we needed all the help we could get. Then the end of the three years came about and we knew we needed to start repaying, so we did. Making the adjustment certainly was tough (still had to pay afterschool/holiday club), but continuing on an interest only wasn't an option as it was always our intention to be own home owner mortgage free by the time we were due to retire.

I can see though how many people would have chosen to pretend all would be fine so they could continue their lifestyle, and delaying making repayments for a bit longer, you do feel so young in your 20s/30s, and end up being caught never bothering of the day when they would have to face losing their home.

marksoton

exiled_red wrote: »

That sounds really good.

I often wonder why more isn't done to incorporate these types of life skills into subjects such as maths or computing. How difficult would it be reword some maths questions to teach kids something as basic as compound interest or to make spreadsheets in computer classes that have some relavence to something financial that they will encounter later in life. If they can see some potential use in the problems they are doing maybe that will improve their performance in these subject as well as giving them as basic foundation in 'life skills'. I remember so many of the problems I did in these subjects at school having no use whatsoever and I say that as someone who liked these subjects so I can only imagine how pointless some of the other kids must have found them.

IMO it's an endemic problem of not engaging.

Spring 2004 -( I think!) Predicted a U at GCSE maths
Summer 2004- Achieved a B at GCSE in maths( due to a £10 a week tutor)
Autumn 2004- started maths at A level. By October i'd jacked for BS.
Current- Work in civil engineering where maths is critical to the mm.

Someone explain that to me... Cos i've lived it and can't!

Pixie5740

Before she retired my mum worked for one of the largest mortgage lenders in the country. In the run up to 2008 she would tell me about the crap somd mortgage brokers would put through. For example people taking interest only mortgages and the repayment vehicle would be £50 a month into a cash ISA. £50 x 12 x 25 years was nowhere near the amount of capital to be repaid but apparently these customers had taken financial advice so through the mortgage would go.

Self cert mortgages for waiters allegedly earning £70k a year.

People who just kept remortgaging to consolidate debt every couple of years gambling on constant, significant house price increases.

Interest only mortgages and even 100% LTV mortgages are bad per se, they can work well if you understand what it is you're getting yourself into and have an exit plan.

moneyistooshorttomention

exiled_red wrote: »

I think that a significant number of people gambled that house prices and incomes would keep rising and that 25 years down the line the money that they borrowed at the start would be so small in real terms that they didn't need to worry about saving for it, and now that gamble has backfired fairly spectacularly.

A friend of my parents bought a large house on interest only (that they wouldn't have been able to afford on a repayment mortgage) the idea being that they would live their for 20+ years while they had their kids living at home. The value of the property would keep rising, then when the kids leave home they could sell up repay what they initially borrowed and have enough equity in the house to buy something for the two of them to live in in their retirement. It sounds like madness but they thought this was a good strategy at the time, but it hasn't worked out...

Exactly the point I made earlier.

I think some of us take carefully-calculated financial gambles somewhere along the line and that is one some people have taken.

I didnt take that one personally - but I've taken other carefully-calculated gambles and they have worked out.

These days though - I admit I can't see any potentially good "financial gambles" available anywhere. There don't seem to have been any on the table for a few years now and I'm not optimistic about there being any on the table ever again in my lifetime.

moneyistooshorttomention

jimbog wrote: »

How times have changed. In 1987 I had to fight to get a repayment mortgage as every bank or building society I visited would only seem to offer endowment mortgages - being so fixated on their commission.

It was only a chance read of a Which report back in '87 that stressed that there was no guarantee the loan would automatically be repaid at the end of the term that gave me the jitters (most banks and building societies raved how it would be a certainty there would be shed loads of cash left over). I remember work colleagues at the time thinking I was absolutely mad

That's when I took out my mortgage on starter house.

I didn't have to fight for my repayment mortgage though. I read a "Which" type magazine about mortgages, decided exactly which type of mortgage I would have, who would give me the best deal and went to them and stated (politely) "I will be having that mortgage product with you please" and it went through easy as pie. Maybe that's because I just went to them confidently and told them it was what I would be having. I don't think the thought crossed my mind of asking if they would give me the mortgage or no. I'd worked out the figures and that they matched up and just expected them to say "yes" without a problem. LOL. Well - I was a civil servant - and that was one of the reasons I was.....and, at that time, they were regarded as a safe bet.

Sitting here thinking - and I believe I might have even told them "....and my mortgage repayments will be £x per month"....and they were.

Davesnave

Go back another decade to the 1970s and you might be told, "Can you come back next year? We've run out of funds." :rotfl:

By the time I bought again, in 1987, it was easy to find a mortgage, but as others have said, most lenders were by then pushing endowment vehicles, and I didn't trust them. There were always caveats in the small print

I remember walking the High Street, asking each BS the same questions. It wasn't until I spoke to the Abbey's rep that the full range of options were presented with no pressure, so I went with them.

moneyistooshorttomention

The 1970s were a tale of their own. That was the decade in which I was supposed to be buying my first house. I had always known I would be buying a house at some point and that was when I was due to. So - as soon as I saw it was possible for women to get a mortgage on their own, I thought "Right - you're on. I'm going to get it right now". Only to find that, at very much the same time, house prices absolutely shot up (courtesy of married womens income being properly taken into account at last) and single people like myself were able to buy in theory - but in practice we'd just been priced out of the market.

Hence the sheer determination basically when I got the chance at last a decade late. I wouldn't have wanted to be a building society person trying to "argue the toss" with me when, finally, I had the money to buy a place at last:rotfl:. A whole decade worth of pent-up frustration and worry would probably have exploded on the spot....

I was thankful that I didnt have to literally walk the High Street - as that magazine had done all my research for me. So I just made out my list with option x at the top of the list and went straight for option x. There was literally not a breath of argument about it...I don't recall anyone trying to even tell me about endowment mortgages (never mind persuade me into one).