MSE News: Warning - if the state helps pay your...

borkid

SkyeKnight wrote: »

If someone gets out an interest only mortgage in their early 60s I can't help but think they intended for the state to pay for it for the rest of their lives. It would be exactly the same cost to them as buying a property they could afford with the benefits of living in a nicer houe and bigger house price increases to leave to their children.

The building societies only lend what the borrower can afford to pay back whether that be from earnings or pension. With an interest only mortgage their is/was an endowment policy to fund as well.

When OH stood as guarantor for my daughter they would only give her a mortgage until he was 75 and based it on his pensions income so they were covered if she defaulted.

borkid

Danday wrote: »

If that type of scheme was in operation it would have suited me no end. 1 bed flats around here rent out at about £1000 a month. Give me £500 of SMI towards the mortgage interest would give me a mortgage debt of £425,000.

Is HB relly that generous? ( have just looked it up and in Merton it is) Staggering, it should be the HB not SMI that is looked into. Where are these people living or are the landlords just trying it on. My son rented a 1 bed flat in Notting Hill last year for £1500 per month but he funded it himself and it wasn't the cheapest he could have rented, always had expensive tastes.

[Deleted User]

borkid wrote: »

Is HB relly that generous? ( have just looked it up and in Merton it is) Staggering, it should be the HB not SMI that is looked into. Where are these people living or are the landlords just trying it on. My son rented a 1 bed flat in Notting Hill last year for £1500 per month but he funded it himself and it wasn't the cheapest he could have rented, always had expensive tastes.

HB was one of the first benefits "they"looked into they split it into HB and LHA

Danday

SkyeKnight wrote: »

If someone gets out an interest only mortgage in their early 60s I can't help but think they intended for the state to pay for it for the rest of their lives. It would be exactly the same cost to them as buying a property they could afford with the benefits of living in a nicer houe and bigger house price increases to leave to their children.

No, just the interest. It then became an interest free loan - they would still have to pay off the capital either by selling and retaining the equity to buy a smaller place for cash, or at worst have no equity and rent with housing benefit picking up the tab.

Danday

borkid wrote: »

The building societies only lend what the borrower can afford to pay back whether that be from earnings or pension. With an interest only mortgage their is/was an endowment policy to fund as well.

When OH stood as guarantor for my daughter they would only give her a mortgage until he was 75 and based it on his pensions income so they were covered if she defaulted.

Have you never heard of 'liar loans'? Most banks & building societies in those days did little checking and relied entirely on what the applicant said. There was no proving anything, the general answer as to how it was to be repaid was ' I am due an inheritance'.
https://www.thisismoney.co.uk/money/mortgageshome/article-3710974/Mortgage-lender-targets-unemployed-bid-bring-sub-prime-liar-loans.html

borkid

Danday wrote: »

Have you never heard of 'liar loans'? Most banks & building societies in those days did little checking and relied entirely on what the applicant said. There was no proving anything, the general answer as to how it was to be repaid was ' I am due an inheritance'.
www.thisismoney.co.uk/money/mortgageshome/article-3710974/Mortgage-lender-targets-unemployed-bid-bring-sub-prime-liar-loans.html

Never come across it as we've always been asked for payslips or our employer contacted. Similarly both my children have had their earnings checked when applying for mortgages. Thanks maybe I'm just too honest.

borkid

venison wrote: »

HB was one of the first benefits "they"looked into they split it into HB and LHA

Just had a quick look LHA for central London £260 which is twice as much as a person on ESA in support group will be getting in total to live off and cover their housing costs if they are buying their own home.

[Deleted User]

I'm bumping this thread as the other one about SMI loans has now been closed

Danday

Robbydabanca wrote: »

In this instance, this does not need bumped. I have noted that you close various threads. If this subject needs discussed, new ones will be opened.

???????????????????

Callum_Jones

borkid wrote: »

So people who work and buy a property then become ill will have to pay back but others who don't make the sacrifice will get it all given to them and not have to pay any back and if in private rented accomodation the taxpayer will be paying off the landlord's mortgage.

I will add I don't claim anything although I have paid in for many years and get a reduced state pension ( I made some provision) but know of people who have had expensive holidays, large families and now claim HB. How is that fair?

Its not "fair".
I dont agree with any free money schemes.
Surely it is better that the government invests in appreciating assets rather than buying houses for BTL landlords?
LHA is of course just free money, someone could claim £100k in LHA, then become a millionaire, and not one penny would be recovered.
JK Rowling, I believe falls into a similar category.