Will there really be a crash?

chucknorris

lisyloo wrote: »

I never had a formal repayment plan.
I had my own plan i.e. money in the bank.
No-one in the industry asked me and no-one knew about this, so I don't think we know who's got what.

Ditto here, I actually started off with endowment policies, which means that the mortgages were classed as interest only, even though there is an investment product available to pay off (in part or full) the mortgage. Although I cashed my endowment policies in after about 14 years, I didn't need a plan, by then my equity was already very significant.

lisyloo

If an endowment was linked to a mortgage by the industry then they'd know about (not saying that's true in your case but it would be in many).


In my case I just took an interest only mortgage.
I think I got one letter saying "look you do know you'll have to pay this off don't you", but there was never any plan declared.


That's why I'm suspicious of any figures bandied around because interest only mortgages were sold widely with no obligation on people to report how they planned to pay it off, so how do they know if people can or if people can't?

chucknorris

lisyloo wrote: »

If an endowment was linked to a mortgage by the industry then they'd know about (not saying that's true in your case but it would be in many).


In my case I just took an interest only mortgage.
I think I got one letter saying "look you do know you'll have to pay this off don't you", but there was never any plan declared.


That's why I'm suspicious of any figures bandied around because interest only mortgages were sold widely with no obligation on people to report how they planned to pay it off, so how do they know if people can or if people can't?

I don't think that mine were linked to the mortgage and I remortgaged after selling them anyway. Plus the last mortgage that we took out in 2008 was pure interest only, I have never had a repayment mortgage, I've only ever paid with cash or taken out interest only mortgages.

PokerPlayer111

lisyloo wrote: »

I think "having little commitements"is quite logical.
We started working in London a few years ago on a 6 month contract. Could have ended after 6 months (or any time during), so that's a good reason not to buy IMO.

Yeah and during renting years we moved 7 or 8 times. 1 time moved away from rental due to noisy neighbours (affects productivity). Another time rented right by the sea/beach for instant chill and health. Another time rented right next to where i could get quick access to stock for business. Another time we moved the mrs from an hour drive to a 10 min drive to her new job at the time.



All translated into saving/making more at a time in life we were maybe able to adapt and cope better due to age.



As soon as we could cash buy and not be broke we snapped the chance, ended up with a much better property than we could have bought starting out also but that could be luck who knows.



Its either rent and make the best of the situation or buy some low end property and make the best of situation when starting out (unless someone can give you money or something, not in our case).


Getting flashy job opportunities in london - i dont know about that kinda thing:D, but yeah obviously another reason to consider renting.

lisyloo

PokerPlayer111 wrote: »

Getting flashy job opportunities in london - i dont know about that kinda thing:D, but yeah obviously another reason to consider renting.

All depends on whether it stacks up.


We tried a 5 hour return commute (on a good day) for a while, which was 9 hours when there were stikes and floods.

I crashed the car one morning which was relatively inconsequential in my old banger but the impact would have probably ripped out my aorta on a motorbike, so that was a wake up call for me (and I wasn't the one doing the long commute but the early drive to the station).



A small flat that avoids horrendous commuting (which has a cost attached as well) can make a job worthwhile if the pay is good enough to justify it and actually at £27 per night per person it's not that bad (you wouldn't find a hotel in central london for £54).


So really it's down to what suits the situation.
Renting suits being economically mobile and short term contracts but this probably is not the most common situation which would be people with children living in the same place.

PokerPlayer111

lisyloo wrote: »

We tried a 5 hour return commute (on a good day) for a while, which was 9 hours when there were stikes and floods.

That does not sound fun.

lisyloo wrote: »

I crashed the car one morning which was relatively inconsequential in my old banger but the impact would have probably ripped out my aorta on a motorbike, so that was a wake up call for me (and I wasn't the one doing the long commute but the early drive to the station).

Oh yeah. Health number 1 asset for sure.

lisyloo

Health number 1 asset for sure.

This is a money saving site so the bias tends to be towards that in absolute terms. However sometimes that absolute view has to be sacrificed for health and happinees.
For me it's about balance and value (after all no point being the richest person in the graveyard) and for us renting does have a place in that equation (but only whilst justified by the salary hence we have the rental period lined up with the employment contract).

MobileSaver

lisyloo wrote: »

Where does that information come from?

Annoyingly I can't find the source right now; it was a report from something like the FCA or ONS that I found at the beginning of the year.

lisyloo wrote: »

I've had an interest only mortgage for the last 10 years which I've just paid off, but no-one ever asked me about my repayment plans so no-one KNEW.

chucknorris wrote: »

I don't think that mine were linked to the mortgage

I don't think you two are typical of interest-only mortgagees. Certainly back in the day most people would have the mortgage and repayment plan arranged by the same broker and one would assume that this link between the two was recorded somewhere.

On that basis one could assume that even that 2% is too high as that's based on known links whereas as you have both pointed out there will be people who do have repayment plans in place but the authorities simply don't know about them.

The following report would seem to confirm that Thrugelmir's "interest-only historic issues" are a non-issue as it states only 0.4% of interest-only mortgages that were not repaid on time led to repossessions over the last 7 years.

Interest-only mortgages: a shrinking target

phillw

Thrugelmir wrote: »

Where are the other 1:9 proposing to find the money from?

Why do they need to find the money?

They are now looking at allowing people to keep paying the interest until they die or go into a home and have to sell the house.

It doesn't really benefit anyone to force the sale of a house towards the end of someones life, except the equity release companies... But they deserve to have their market pulled from under them, they are no better than the pay day loan companies.

Thrugelmir

lisyloo wrote: »

That's why I'm suspicious of any figures bandied around because interest only mortgages were sold widely with no obligation on people to report how they planned to pay it off, so how do they know if people can or if people can't?

People have responded to letters sent out. The lenders with poor underwriting standards in the boom years are well known. The old mortgage books are slowly whittling down. Complaints of being mortgage prisoners is an indication of potential issues in the future as well. With interest rates at rock bottom levels there's been an opportunity for people to tackle the issue even if only just in part.