MSE News: Interest-only mortgage market dries up as Coventry pulls plug
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Former_MSE_Helen
Posts: 2,382 Forumite
"The mutual announced this morning it will axe these deals from Monday, after RBS said the same this week ..."
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Int only is dead. It was very useful in terms of affordability. For example where people had young children and wanted to keep costs down until they were both back at work.
This is yet another boost for the waiting hoardes of landlords ready to snap up all the would be borrowers that are now priced and regulated out of the mortgage market.
One of the most common issues I find is older borrowers having gotten divorced being offered a short and thus unaffordable mortgage. In the past they could resort to int only and then one day down size / get back on feet / meet a new partner with thier own money etc. 99% of those people did sustain the mortgage but now the FSA wont even give them a chance.
Great day for fairness, the landlords await all these excluded people.0 -
Landlords with their BTLs all on interest-only!I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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I welcome this. It was just being used like self cert/liar loans to over borrow. Rather than help it just allowed house prices to be pushed up.
Now we need to clamp down on buy to let interest only with strict repayment vehicle compliance. I suspect most don't have any.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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I welcome this. It was just being used like self cert/liar loans to over borrow. Rather than help it just allowed house prices to be pushed up.
Now we need to clamp down on buy to let interest only with strict repayment vehicle compliance. I suspect most don't have any.
Surely as a not landlord.you rent from the bank and make your profit on the turn when the rent you receive is higher than the interest payable, the profit being a reward.cor.running a capital risk. Why would.you want or.need.a repayment vehicle, the loan security is the repayment vehicle.I think....0 -
I think it's a shame as interest-only was a useful product if used correctly and responsibly by the borrower.
My first mortgage (1999) at 22yrs old was interest only for 4 years due to that being all I could afford then, c/w endowment policy.
However, I knew that after 4 years I would be earning a bit more and would swap over to capital & repayment (which is exactly what I did).
This product does seem to have been 'abused' (is that the right word?) more in the recent years since then. Combination of bank lending and customer borrowing irresponsibly perhaps.As my Mum always said "Look after the pennies and the pounds will look after themselves"0 -
A landlord being forced to sell a BTL property if they can't afford to repay a mortgage isn't a huge problem. Completely different kettle of fish to a residential mortgage that can't be repaid.Now we need to clamp down on buy to let interest only with strict repayment vehicle compliance. I suspect most don't have any.0 -
I welcome this. It was just being used like self cert/liar loans to over borrow. Rather than help it just allowed house prices to be pushed up.
Now we need to clamp down on buy to let interest only with strict repayment vehicle compliance. I suspect most don't have any.
Yeah thanks for that.
I am one of those people on an interest only mortgage for the simple reason that we plan on having kids very soon and it gave us added flexibility when we go down to the one wage.
We are extremely responsible and have already paid off capital in this last year equivalent to three years on a repayment mortgage.
Next year our tracker comes to and end and we were hoping to fix on an interest only for the simple reason it takes off some of the pressure when going down to a single wage for a couple of years.
We can of course afford it but it would have been much preferable if we had the choice to make capital payments each month (as we currently do) or just pay the interest for a short time to cover the increased expense of a new sprog.
So while I get the whole issue, do not punish us all as some of us are extremely capable and responsible. My brother has been doing the same for the last few years while his children are very young, alas I fear we may have just missed out on having the same flexibility when our kids come along. Not good, hope some are still about when we come to fix.0 -
TBH I think this is preparation for the MMR.
When lenders find themselves having to give advice, for which they will be accountable, they don't want issues like interest-only in the way to trip up their advisers.
They were happy to do it when brokers were advising or the borrower was buying "execution-only" without advice and no responsibility accepted by the lender.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Yeah thanks for that.
I am one of those people on an interest only mortgage for the simple reason that we plan on having kids very soon and it gave us added flexibility when we go down to the one wage.
We are extremely responsible and have already paid off capital in this last year equivalent to three years on a repayment mortgage.
Next year our tracker comes to and end and we were hoping to fix on an interest only for the simple reason it takes off some of the pressure when going down to a single wage for a couple of years.
We can of course afford it but it would have been much preferable if we had the choice to make capital payments each month (as we currently do) or just pay the interest for a short time to cover the increased expense of a new sprog.
So while I get the whole issue, do not punish us all as some of us are extremely capable and responsible. My brother has been doing the same for the last few years while his children are very young, alas I fear we may have just missed out on having the same flexibility when our kids come along. Not good, hope some are still about when we come to fix.
To counter this we are on a repayment mortgage and bought well within our means to which we can afford children and stay on a repayment mortgage quite easily (if we have children that is).Have my first business premises (+4th business) 01/11/2017
Quit day job to run 3 businesses 08/02/2017
Started third business 25/06/2016
Son born 13/09/2015
Started a second business 03/08/2013
Officially the owner of my own business since 13/01/20120 -
Their are wider issues to consider.
I suspect this is in part one of them.
UK banks may need more capital, Bank of England says
http://www.bbc.co.uk/news/business-205406930
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