Reduce mortgage debt by understanding the system

Incognito123

I have a mortgage of £207,000 I.O (down from an original £210,800), I would love nothing more than for it to die a horrible death. This is on a 3-bed end of terrace house in Zone 2 in London.

Apart from overpaying it (as long as the overpayments are fee free) there seems to be no other practical way of tackling it – unsurprisingly.

This forum seems to concern itself with two issues – I would like to touch on these and seek any further ideas anyone has based on the below information for a possible number 3:

• Obtaining the best deal suitable for your individual circumstances.
• Methods and means of increasing the amount of cash available to overpay and reduce the debt.

First there are a couple of things, I am sure have been mentioned before but worth considering depending on your personal circumstances but:

Rent a room out under the rent-a-room scheme (simply place an ad for free on www.gumtree.co.uk). http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

This allows £4250 a year, which you don’t even need to declare to the taxman as the benefit is automatic. Roughly £354 a month or £81 a week (more if you only rent the room for less than a tax year – April – April). The second method is overpaying with any spare cash you have (however debt with the highest interest should be paid off first) using the various methods mentioned on this forum when possible.

There are a few tid bits of information I have picked up in my travels – how to put them to good advantage is an open question, however simply knowing the information below may assist in option 1 – obtaining the best deal at the next renewal and assist in a new possible 3rd option… if you really want to own your house outright a bit of research and understanding the system is in order:

• Learn about what “money” actually is.

http://www.whale.to/m/greaves1.html

• Learn about Inflation.

http://economics.about.com/od/helpforeconomicsstudents/f/inflation.htm

• A bit more of a UK focus (despite the name and bearing with the presenters annoying mannerisms) as it shows you all about the BoE. Some free clips are on youtube if you google it to see a few clips on what its about (and like or loathe it, bittorrent) http://en.wikipedia.org/wiki/The_Money_Masters

If you are still interested in my post a couple of other quotes or points I have additionally come across include:

Paper money is just a token, subject to be devalued at any point by the government.

High Inflation reduces the amount of debt you owe, debt does not rise with inflation, however payments on that debt will rise (meaning high inflation means high interest rates from BoE).

“The big lie of Capitalism is that everyone can be rich. That is, of course, nonsense. Capitalism requires a wealth differential, which basically means only a tiny minority of people can be allowed to be wealthy, while the vast majority must be kept poor enough so that they can never quit doing what the wealthy tell them to do.
Capitalist government exists to impose impoverishment mechanisms on the population, to keep them poor. Taxes are one way (especially war taxes), and if that is not sufficient, to debase the currency so that the accumulated proceeds from a lifetime of work become worthless, returning the worker to that state of poverty which is so useful.” – Mike Rivero


Hopefully this leads to you asking questions, how these issues relate to your situation today and thinking of other solutions:


Governments have no interest at all in letting Joe Bloggs owning or keeping their home outright, stop working for low wages or accumulate any significant amounts of wealth and stop being a productive member of society by having enough to stopping work and stop paying 40%+ tax for your labour. (Plus VAT when you come to spend it).


Money does not grow on trees, how can the BoE create £10 Billion pounds to make available to the banks other than printing it and devaluing the currency?

Did you know Gordon Brown sold half the UK gold reserves in 2001 at a £2Billion pound loss? Why?
http://www.timesonline.co.uk/tol/news/politics/article1654931.ece

Did you know that the US government actually went bankrupt and defaulted in 1933 – the short of it is they made it illegal for US citizens to own gold (having to surrender it for a prescribed rate of exchange), had federal marshal’s witness the opening of any Bank Safety box and, for want of a better word, confiscated any gold found by paying a prescribed amount of federal notes which were subsequently devalued a few months later. Its still on the books for them to do this again.

As an example in order to get any weird and wonderful ideas put on the table -> The US dollar is at the lowest point is has been since I can remember. The Canadian Dollar recently reached and exceed parity with it. The Euro (which the pound seems fixed to at 1 Euro -> 2/3 pounds) is at its highest ever against the US dollar which has fallen in value since it used to be $1US -> .85 euro cents a few years ago!

Without getting exact numbers or time frames lets say 5 years ago when the $US was strong, I had $100 at 7% gross/5% nett interest a year for 5 years as below

$100 -> $105 -> $110.25 -> $115.76 -> $121.55 -> $127.62

Lets say at the start $1 was .85 euro. At the start my $100 bought me 117.64 Euro ($100 / .85)

Now because the US dollar has tanked and is in $1.40 to a 1 Euro – after 5 years my $127.62 are now worth 91.16 Euro. This means if you are a US citizen, over 5 years you have actually lost money, however in the US it looks like you have made money – and paid tax on the so called profits in the process!!!

Now the reason I provided this example is how can you protect yourself from the same thing happening here in the UK? – this directly impacts your mortgage as those saving in ISA’s opposed to paying it off could find themselves in the exact situation noted above!!!

Anyway I would love to hear all your comments and ideas if you have followed me this far.

ixwood

!!!!!!?? Do you have a question, or just enlightening everyone?

ixwood

The dollar is on the slide, it's no secret. Still not sure what your point is though.. Not to invest to pay an IO mortgage?

ixwood

"stop working for low wages or accumulate any significant amounts of wealth and stop being a productive member of society by having enough to stopping work and stop paying 40%+ tax for your labour. (Plus VAT when you come to spend it)."

Ok. I'll do that on Monday. Thanks.

Any tips?

Gorgeous_George

In short, don't holiday in the Eurozone.

I think.



GG

Kaz2904

It could be because of the time and I'm tired but I didn't see a number three?

Do foreign interest rates really affect us on a day to day basis unless we are holidaying abroad? Long term maybe yes but not short term.
I haven't read all the articles, will do so when I get up tomorrow evening but the gist seems to be that if you do spend time creating wealth in any country then the government will do you over by going bust and stealing your gold. I didn't get what the solution to this was?
Any thoughts?