Interest Only Mortgages advice needed

MWT

bery_451 said:

The borrower don't have to pay the principal capital at the end of the interest mortgage as the borrower could sell the property instead and who knows houses prices could double by then meaning that £100k house example stated before could be worth £200k meaning borrower made £100k profit and the bank gets the other £100k to obviously pay off the principal capital. 
Of course the opposite can happen where the borrower goes in negative equity meaning the borrower is rekt and have to make up the difference if house is worth less than £100k when selling at end of mortgage.

That is why you'll find interest only 'Buy To Let' mortgages available at 75% LTV with the condition that you cannot live in the property.

The 75% LTV covers the downside risk in property value and the inability to live in the property keeps it clear for a sale near the end of the term. The base expectation is that it is a purchase to provide income from letting with disposal of the property as the vehicle for repayment.

You will not find residential mortgages on similar terms.

As for the rest, if you want to debate monetary policy then there are better places to do it than here, if you want help with your own mortgage plans then provide more detail about what you intend to do, but as already stated, 100% interest-only mortgages are not a currently available product.    

big_saver_5

Problem with the 'sell the house at the end' is people get to the age their interest only mortgage is ending and decide they dont want to sell. 

csgohan4

So OP can't get a I/O mortgage and is complaining about only the more 'well off' people getting them. Without reference to risk appetite of lenders and defaulting probability

Common sense wise, you will likely get your money back with someone who is has a higher income, than someone who is scraping by and may be more at risk of repo. 

Why do you think interests rates are lower for those who have put more deposit in or paid off significant amount of capital in their house? 

It's like a motorist who has had 3 fault crashes against someone with none, who do you think has a higher premium? It's about risk stratification and not just about perceived rich people get all the benefits argument.

These 'rich' people also worked hard for their money and made it go further and made sacrifices as well. Rather than that expensive holiday or car, they paid off more of their mortgage or saved more into their emergency fund. 

Have you looked into the self declaration/Sub prime mortgages and why they were one of the reasons for the 2008 crash?

Some People cannot simply be trusted in their financial affairs when lenders are involved as well. Hence the introduction of stricter regulation and criteria for lending. Rightly so imo.  Crazy that people used to be able borrow 125% of their value of the house they bought. 

They certainly got Rekt, when it came to paying the lender back and couldn't afford to. crying wolf and mis sold in the process. 

Thrugelmir

bery_451 said:

Thrugelmir said:

US mortgage market is very different. Higher rates. Though possible to lock in for 30 year terms @ 3%-4%. 

Okay so you saying you can get 30 year fixed term interest only however the rate will be higher at 3-4% instead of the usual offered 1-2% these days? 

Are these mortgages available on Comparethemarket, moneysupermarket or whatever comparison site or do I have to go through a specialist mortgage broker to get this long term fixed deal?

My comment was in relation to the US. 

bery_451

csgohan4 said:

So OP can't get a I/O mortgage and is complaining about only the more 'well off' people getting them. Without reference to risk appetite of lenders and defaulting probability

Common sense wise, you will likely get your money back with someone who is has a higher income, than someone who is scraping by and may be more at risk of repo. 

Why do you think interests rates are lower for those who have put more deposit in or paid off significant amount of capital in their house? 

It's like a motorist who has had 3 fault crashes against someone with none, who do you think has a higher premium? It's about risk stratification and not just about perceived rich people get all the benefits argument.

These 'rich' people also worked hard for their money and made it go further and made sacrifices as well. Rather than that expensive holiday or car, they paid off more of their mortgage or saved more into their emergency fund. 

Have you looked into the self declaration/Sub prime mortgages and why they were one of the reasons for the 2008 crash?

Some People cannot simply be trusted in their financial affairs when lenders are involved as well. Hence the introduction of stricter regulation and criteria for lending. Rightly so imo.  Crazy that people used to be able borrow 125% of their value of the house they bought. 

They certainly got Rekt, when it came to paying the lender back and couldn't afford to. crying wolf and mis sold in the process. 

Lenders that caused The Great recession back in 2008 were not responsible in their lending giving away 120% LTV mortgages to anyone and the lenders have profited massively from this so called 'credit default swap' derivative that they fraudulently sold the mortgages onto private investors who got Rekt when the crash happened if I remember correctly back then. 

Guess what, lenders are still not responsible when it comes to lending today except the difference in today is you just need a higher deposit however lenders will still lend to anyone regardless of status or income. You can get that deposit from credit cards & personal loans!

With the government introducing a new low 5% deposit mortgage scheme soon, even a uni student with no job will use his/her student loan money to buy a house!

That is why our debt and the country debt is not reducing, were at the highest debt in history today and our overall debt will still get worse.

In any market, market prices are determined by simple supply & demand. House prices are still rising because a lot people are still buying houses now = higher demand. But guess what? These buyers are not buying homes with their own cash, they are buying it with debt/mortgages that is also fuelled by low interest rates by the bank of england that makes the 'debt' cheap & more attractive for home buyers hencer higher demand = home prices keep going up.

The rich do not need to borrow, the middle class may need to borrow but I thought the middle class were eradicated since the 2008 crash causing the wider gap between the rich & poor. Of course banks will lend to a high net worth individual as they will see the lowest risk for their interest returns but come on, show me a millionaire who is applying for mortgages lol. The rich do take on debt on their balance sheet but only if its good debt where the debt is used to grow or expand their portfolios. Mortgages are not good debt as the 2008 crash has told us.

If banks were more responsible in their lending then the demand for housing would be disrupted as a lot of mortgages would be turned down declined regardless if the borrower has deposit as the lender will check everything of the borrower and sees at the end borrower do not qualify for mortgage. Checking takes time and money and resources and banks do not like that  House prices would have went down because of this but they still going up. All mortgage decisions are done by computers using databases from credit reference agencies that are flawed to begin with.

Lenders have most of their stake and portfolios in real estate assets I guess so its not in their best interest to disrupt home buying to artificially keep house prices high for their benefit but this is simply a 'Ponzi Scheme' and it will crash and the debt bubble will burst so badly that it will make the 2008 crash look like nothing.

grumiofoundation

bery_451 said:

csgohan4 said:

So OP can't get a I/O mortgage and is complaining about only the more 'well off' people getting them. Without reference to risk appetite of lenders and defaulting probability

Common sense wise, you will likely get your money back with someone who is has a higher income, than someone who is scraping by and may be more at risk of repo. 

Why do you think interests rates are lower for those who have put more deposit in or paid off significant amount of capital in their house? 

It's like a motorist who has had 3 fault crashes against someone with none, who do you think has a higher premium? It's about risk stratification and not just about perceived rich people get all the benefits argument.

These 'rich' people also worked hard for their money and made it go further and made sacrifices as well. Rather than that expensive holiday or car, they paid off more of their mortgage or saved more into their emergency fund. 

Have you looked into the self declaration/Sub prime mortgages and why they were one of the reasons for the 2008 crash?

Some People cannot simply be trusted in their financial affairs when lenders are involved as well. Hence the introduction of stricter regulation and criteria for lending. Rightly so imo.  Crazy that people used to be able borrow 125% of their value of the house they bought. 

They certainly got Rekt, when it came to paying the lender back and couldn't afford to. crying wolf and mis sold in the process. 

Lenders that caused The Great recession back in 2008 were not responsible in their lending giving away 120% LTV mortgages to anyone and the lenders have profited massively from this so called 'credit default swap' derivative that they fraudulently sold the mortgages onto private investors who got Rekt when the crash happened if I remember correctly back then. 

Guess what, lenders are still not responsible when it comes to lending today except the difference in today is you just need a higher deposit however lenders will still lend to anyone regardless of status or income. No they won't. You can get that deposit from credit cards & personal loans! Can you?

With the government introducing a new low 5% deposit mortgage scheme soon, even a uni student with no job will use his/her student loan money to buy a house! Will they?

(Spoiler alert - they won't)

That is why our debt and the country debt is not reducing, were at the highest debt in history today and our overall debt will still get worse. Remind me how much government debt is residential mortgages?

In any market, market prices are determined by simple supply & demand. House prices are still rising because a lot people are still buying houses now = higher demand. But guess what? These buyers are not buying homes with their own cash, they are buying it with debt/mortgages that is also fuelled by low interest rates by the bank of england that makes the 'debt' cheap & more attractive for home buyers hencer higher demand = home prices keep going up. 

The rich do not need to borrow, the middle class may need to borrow but I thought the middle class were eradicated since the 2008 crash causing the wider gap between the rich & poor. I must tell my parents they were eradicated Of course banks will lend to a high net worth individual as they will see the lowest risk for their interest returns but come on, show me a millionaire who is applying for mortgages lol. Will if they want to buy a 2M house but only have 1M.... The rich do take on debt on their balance sheet but only if its good debt where the debt is used to grow or expand their portfolios. Mortgages are not good debt as the 2008 crash has told us. Mortgages are 'good debt'. Did everyone with a mortgage lose their house in 2008? 
https://www.theguardian.com/money/2009/feb/20/repossessions-homeowners

If banks were more responsible in their lending then the demand for housing would be disrupted as a lot of mortgages would be turned down declined regardless if the borrower has deposit as the lender will check everything of the borrower and sees at the end borrower do not qualify for mortgage. They do Checking takes time and money and resources and banks do not like that   House prices would have went down because of this but they still going up. All mortgage decisions are done by computers using databases from credit reference agencies that are flawed to begin with. I am not sure why my lender is piddling about lending at sub. 2% rates since they have developed the most realistic AI in history. 

Lenders have most of their stake and portfolios in real estate assets I guess so its not in their best interest to disrupt home buying to artificially keep house prices high for their benefit but this is simply a 'Ponzi Scheme' and it will crash and the debt bubble will burst so badly that it will make the 2008 crash look like nothing. 

A for effort, maybe scrape an E for understanding, and thats me as a generous marker.

You see to have a fundamentally flawed understanding of how people get approved for mortgages. 

SpiderLegs

It started off so well, but now turned into just another HPC rant 

MWT

SpiderLegs said:

It started off so well, but now turned into just another HPC rant 

Given the initial premise was a non-existent 100% LTV interest only product I might argue with it having 'started off so well'...

[Deleted User]

Feels like Crashy has got a new account

big_saver_5

You think people can get mortgages without checks? Both myself and my wife are self employed and had a painful 4 month dance with Natwest which nearly cost us our purchase (turns out our original broker chose the wrong lender for our circumstances)
You obviously haven't applied for a mortgage if you think there are no checks. A loan for the deposit would get picked up by solicitors as they asked for 6 months bank statements for us showing where our deposit was coming from