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Very interesting....


Davy51
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Seems like there is another financial scandal getting ready to surface ,namely interest only mortgages. It seems many people will not have any available money to repay their capital debts so another economic black hole is looming .

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It seems as if it was a cheaper way for people to get on the property ladder but as usual hadn't been thought through properly. Now the time has come to start paying the capital back a lot of people either have very little or nothing at all to pay with.

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I could never understand interest only mortgages (and was offered one only the other week when buying a property so they still exist)

 

You see a house for say 100 grand but can't afford the "normal" repayment mortgage so they offer you an interest only one which then brings the payments into your price range.... trouble is, you should then also be saving in some form of ISA or whatever in order to pay the initial capital back when the mortgage ends...

 

I guess a lot were or are counting on having a higher income at the end of the mortgage or part way through so that they could start saving and pay it off that way...

 

but I also assume that if you had an interest only mortgage and a payment plan to save for the end of the term to pay the initial mortgage; you may have well had a repayment mortgage in the first bloody place!

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Many people were planning to sell at a profit once the mortgage term was up and buy somewhere smaller with the proceeds.

 

The fools assumed that house prices would simply continue to rise forever, and they deserve everything they get in return for their own financial stupidity.

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What Inky says. When these mortgages were popular the selling point was the rate at which house prices were rising, so you could expect to be able to sell at a good profit and pay off the full amount leaving you with a nest egg in the endowment if you had one.

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These type of mortgages would have been ideal for the buy to rent brigade i would think.

 

I prefer the "buy for pension" brigade.... after Brown ripped the arse out of all the private pensions; it was the one avenue left to plan for a retirement!

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If the Tories didn't like what Brown did why have they not reversed it?

 

too late Kije.... damage already done; pension funds have already lost billions because of what he did. the tories would have to put all that money back plus any lost interest.... not gonna happen really is it?

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I only asked Baz, as you have asked me before, when talking about Maggie and other things, if it was a bad policy why didn't Labour change it :wink:

 

I know you did.... but the difference is that many of the so called "Bad" policies of Maggie could have been reversed; the pension raid by Broon couldn't really, especially in these times of no money!!

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If they wanted Baz they could make a commitment to do so. But No they have not.

 

a commitment using "what" exactly to fund it?

 

There is no money left..... making a commitment would then turn the pressure on them to deliver and they won't do that; no one would.... best to let the plebs suffer and for Broon to take the blame!

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But the housing market is still weighted in favour of getting people to rent  which is a cheaper short term option than having to stump up a deposit which can be difficult for  young working families to obtain unless they have a generous benefactor in the family. And as for the ridiculous idea of half buy & half rent a house i can't see the point because how could you really sell it if your prospects improved in later years & you wanted to move ?

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So, because some people took out loans that they never had a snowball's chance of ever paying back, nobody should ever be allowed ever again to be able to lend/borrow money to/from anybody else ever again just in case. Have I got this right? Seems a bit OTT to me.

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