They can't be.....can they?

iammumtoone

steampowered wrote: »

I agree. But the fact remains that the government is still paying towards an asset you get to keep. It is only fair you pay back that money when you are able, or that the government gets a share of the asset.

But if you are only paying the interest you don't get to keep it, you have to sell it at then end of the term to give the money back to the bank. You only get to keep it if you pay the capital (something the government has never done).

Red-Squirrel_2

steampowered wrote: »

I think that is a very arbitrary distinction. Paying interest is still paying the mortgage.

Money is money. £10 is £10 whether it is interest or whether it is capital.

If the government pays the interest on your mortgage, you are benefiting from inflation (reducing the value of the principal) and from increases in capital (increasing your equity) over time.

The taxpayer is paying for you to have a more valuable asset. Its a bit different to paying rent - you don't get to keep rent.


I agree. But the fact remains that the government is still paying towards an asset you get to keep. It is only fair you pay back that money when you are able, or that the government gets a share of the asset.

SMI doesn't cover the full mortgage payment though, the distinction between interest and capital is not arbitrary, its quite crucial!

parkrunner

Red-Squirrel wrote: »

That's not help at all though really, is it?

I say this as someone who unthinkingly took out a student loan about 15 years ago that is now bigger than it was on day one despite making not insubstantial repayments every month. I would hate to be forced to take on another government loan like this.

If it stops your home from being repossessed then yes it's most definitely a help. Plus the loan doesn't have to be paid back until the property is sold or transferred.

iammumtoone

Red-Squirrel wrote: »

A lot of people in that position will have ended up there by circumstance, not design though. Who is helped by them being forced out of their homes into rented ones and paid housing benefit instead of SMI?

How can you end up in that position by circumstance, when you take out a mortgage you know the terms and end date. You know the age you need to keep working to to pay it off, if you have to extend the term for any reason again you still know your new working age date.

Of course there are people who intend to work beyond pension age but can't due to illness, I am not including these I said that the benefit should still be paid for the sick.

It reads to me that you could extend/take out a mortgage to beyond pension age and get interest paid indefinitely past this age regardless it you are still capable of working.

I know many people of pension age who are still working.

Red-Squirrel_2

parkrunner wrote: »

If it stops your home from being repossessed then yes it's most definitely a help. Plus the loan doesn't have to be paid back until the property is sold or transferred.

You'd be better off selling up, going into rented, and claiming housing benefit that you don't have to pay back ever.

I really don't trust the government as a provider of loans I'm afraid.

iammumtoone

parkrunner wrote: »

If it stops your home from being repossessed then yes it's most definitely a help. Plus the loan doesn't have to be paid back until the property is sold or transferred.

Now.

What if a government in future decides it is short of money so changes the terms to call in all these loans immediately.

Red-Squirrel_2

iammumtoone wrote: »

How can you end up in that position by circumstance, when you take out a mortgage you know the terms and end date. You know the age you need to keep working to to pay it off, if you have to extend the term for any reason again you still know your new working age date.

Of course there are people who intend to work beyond pension age but can't due to illness, I am not including these I said that the benefit should still be paid for the sick.

It reads to me that you could extend/take out a mortgage to beyond pension age and get interest paid indefinitely past this age regardless it you are still capable of working.

I know many people of pension age who are still working.

Lots of ways! You can take out a repayment mortgage but switch to interest only in hard times and then never get back in a good enough position to start making capital repayments.

Or what about people who were sold interest only mortgages with endowment policies that underperformed?

iammumtoone

Red-Squirrel wrote: »

Lots of ways! You can take out a repayment mortgage but switch to interest only in hard times and then never get back in a good enough position to start making capital repayments.

Or what about people who were sold interest only mortgages with endowment policies that underperformed?

True but there does seems to be a loophole that needed to be closed. Its like all of these things originally put in place to help those as you describe above but then taken advantage of by others who don't necessarily need it so gets stopped for everyone.

moneyistooshorttomention

Now I don't see it as "others taking advantage" and therefore the Government stops it.

I see it as someone/somewhere in the Government has sat down and worked out just what proportion of people would normally expect to have a steady/secure job (which is basically the premise on which mortgage companies loan the money) - but these days are being forced to work in the "gig economy" and wondering how they are to meet their mortgage payment obligations (when those exact same people a generation earlier would have had a steady job - and its not their choice/fault if they cant get one now at this point in history).

My suspicion is that a lot of "would-be steady job holders" are also having to claim this benefit (whether they like it or no - just because of the current state of the job market) and the Government doesnt want to pay the sums of money involved to cover this as well as "those that have managed to get steady jobs - but then got made redundant from them".

It's a hard choice (yeh...right...:cool:) when a Government has to decide whether to impose a higher tax rate on high earners v. hitting the ordinary person in the street that has a mortgage and the misfortune to hit hard times during the course of that mortgage:cool: (yep....I am being sarcastic about Government spending priorities....).

borkid

Red-Squirrel wrote: »

SMI doesn't cover the full mortgage payment though, the distinction between interest and capital is not arbitrary, its quite crucial!

In many cases it doesn't cover the whole of the interest either. It depends on the interest rate you are paying. The government use the same interest rate for everyone.