Interest only mortgages
Discussion
Got a newsletter from my IFA saying that quite a few bansk are withdrawing interest only mortgages and those that will do them will only do so on LTV's up to 75%. Apparently Barclays will only do them if you have an exsisting client relationship (somethign other than a current account I think i.e. an ISA) at a 75% LTV but will do 66% LTV's for everyone else.
That's going to cause issues for some people!
That's going to cause issues for some people!
Beardy10 said:
Got a newsletter from my IFA saying that quite a few bansk are withdrawing interest only mortgages and those that will do them will only do so on LTV's up to 75%. Apparently Barclays will only do them if you have an exsisting client relationship (somethign other than a current account I think i.e. an ISA) at a 75% LTV but will do 66% LTV's for everyone else.
That's going to cause issues for some people!
Erm, yes.That's going to cause issues for some people!
Why do you think house prices are plummeting?
Sounds good to me.
Still far too expensive on a historical basis.
Massive Public and Private sector debts to service will keep a lid on growth going forward.
Only way out is massive inflation. Hmmm, did you ever wonder why inflation is consistently over BoE target!?
Except its cost price inflation and not wage inflation, so that's not working so well then. Its actually making the effect worse.
Its going to be carnage when interest rates double. Afterall 0.5% to 1% is a 100% increase in interest.
Still far too expensive on a historical basis.
Massive Public and Private sector debts to service will keep a lid on growth going forward.
Only way out is massive inflation. Hmmm, did you ever wonder why inflation is consistently over BoE target!?
Except its cost price inflation and not wage inflation, so that's not working so well then. Its actually making the effect worse.
Its going to be carnage when interest rates double. Afterall 0.5% to 1% is a 100% increase in interest.
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
Fatman2 said:
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
What's the difference between repaying the capital on a depreciating asset by installments and paying off the capital in one lump sum on quitting it? (I take it you really do want property to become a depreciating asset).I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
Soovy said:
Beardy10 said:
Got a newsletter from my IFA saying that quite a few bansk are withdrawing interest only mortgages and those that will do them will only do so on LTV's up to 75%. Apparently Barclays will only do them if you have an exsisting client relationship (somethign other than a current account I think i.e. an ISA) at a 75% LTV but will do 66% LTV's for everyone else.
That's going to cause issues for some people!
Erm, yes.That's going to cause issues for some people!
Why do you think house prices are plummeting?
Soovy said:
Beardy10 said:
Got a newsletter from my IFA saying that quite a few bansk are withdrawing interest only mortgages and those that will do them will only do so on LTV's up to 75%. Apparently Barclays will only do them if you have an exsisting client relationship (somethign other than a current account I think i.e. an ISA) at a 75% LTV but will do 66% LTV's for everyone else.
That's going to cause issues for some people!
Erm, yes.That's going to cause issues for some people!
Why do you think house prices are plummeting?
I think you'll find the banks are just trying to pre empt the new rules which the FSA will be bringing in next year.
http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/118.shtml
http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/118.shtml
groak said:
Fatman2 said:
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
What's the difference between repaying the capital on a depreciating asset by installments and paying off the capital in one lump sum on quitting it? (I take it you really do want property to become a depreciating asset).I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
I realise I'm an idealist and that 'normal' prices will never return but I still stand by my opinion that interest only mortgages are generally bad news (except my one LOL
).Regarding the difference in your example, even on a depreciating asset it would be worth making capital repayments as at least that's progress. Maybe not a lot (relative to depreciation) but something is better than nothing and you still pay a load less interest.
Fatman2 said:
groak said:
Fatman2 said:
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
What's the difference between repaying the capital on a depreciating asset by installments and paying off the capital in one lump sum on quitting it? (I take it you really do want property to become a depreciating asset).I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
I realise I'm an idealist and that 'normal' prices will never return but I still stand by my opinion that interest only mortgages are generally bad news (except my one LOL
).Regarding the difference in your example, even on a depreciating asset it would be worth making capital repayments as at least that's progress. Maybe not a lot (relative to depreciation) but something is better than nothing and you still pay a load less interest.
If you're young and you're worried about your IO mortgage, why don't you change it to a 30 year repayment? Shouldn't be MUCH dearer, should it?
groak said:
Fatman2 said:
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
What's the difference between repaying the capital on a depreciating asset by installments and paying off the capital in one lump sum on quitting it? (I take it you really do want property to become a depreciating asset).I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
Deva Link said:
Beardy10 said:
That's going to cause issues for some people!
Presumably they're not going to withdraw them from existing customers, so why is it an issue?I read separately that lenders are converting interest only buy to let mortgages to repayment when LTV's drop below 75% in some cases.
Fatman2 said:
groak said:
Fatman2 said:
Good idea. I've never understood the logic behind getting a mortgage you couldn't afford to pay the capital on. Admittedly my mortgage is interest only but it's an offset type and I've always treated it as a capital repayment.
I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
What's the difference between repaying the capital on a depreciating asset by installments and paying off the capital in one lump sum on quitting it? (I take it you really do want property to become a depreciating asset).I really feel for those that have bought in the last 4 years or so but prices falling is a good thing and will hopefully see a return of prices that people can actually afford, instead of needing a 6 figure salary.
I realise I'm an idealist and that 'normal' prices will never return but I still stand by my opinion that interest only mortgages are generally bad news (except my one LOL
).Regarding the difference in your example, even on a depreciating asset it would be worth making capital repayments as at least that's progress. Maybe not a lot (relative to depreciation) but something is better than nothing and you still pay a load less interest.
Nothing wrong in being an idealist either IMHO. Unfortunately house prices have been driven largely by the London markets hyper inflated levels brought about by the extremely wealthy buyers followed by the evergreen 'ripple effect'. If I was still paying a mortgage I would definitely be focusing on paying off as much capital from the loan as I could manage, before the interest rates start climbing again. So I agree with what you say. crankedup said:
Unfortunately house prices have been driven largely by the London markets hyper inflated levels brought about by the extremely wealthy buyers followed by the evergreen 'ripple effect'.
You make a very valid point. Why, just the other day a rich chap from Russia was looking round a small Welsh village looking for a 2up 2 down for the family to use in Welsh summers.NoelWatson said:
Fatman2 said:
I realise I'm an idealist and that 'normal' prices will never return
Why not?As a potential FTB in a year or two I could do with house prices coming down a touch but I can't see it happening.
The average person in the UK earns about £25k if I'm right so a couple looking to purchase a house, both on this wage would have a huge selection of house to choose from wouldn't they?
Also what factors would drive houses becoming really, really low?
I'm probabaly misunderstanding, but all that seems the wrong way around?
Beardy10 said:
Well according to my IFA they've had two clients whose interest only mortgages have come to end and the lender will only extend credit on an interest only basis.
Do you mean on a repayment basis?Beardy10 said:
Other lenders are demanding proof that there is something in place to repay the mortgage when deals expire.
Haven't they always done that? I've got an old low-cost endowment mortgage and I certainly had to provide proof of the policy's existence.Beardy10 said:
I read separately that lenders are converting interest only buy to let mortgages to repayment when LTV's drop below 75% in some cases.
Shouldn't that be when they're above 75%?Gassing Station | Finance | Top of Page | What's New | My Stuff