Monday, Aug 23, 2010
Don't worry, rising house prices will inflate away the debt
Daily Fail: Super-long mortgages have sting in the tail
They are billed as a painless new way to spread the cost of buying a home. But experts warn the introduction of 40-year mortgage terms may end up almost doubling your debts - and leave you struggling to pay the bills well into your 70s. A host of lenders have ditched the old rule that mortgage terms are set for a standard 25 years and must be cleared by the normal retirement age. Now, Halifax, HSBC, First Direct and ING Direct all let borrowers keep their mortgages running for another decade and a half. Taking a typical £125,000 repayment mortgage for 25 years will cost £695 a month at a decent 4.5 per cent interest rate, for example. But you have to find just £562 if you extend the mortgage term to 40 years. The saving is likely to be attractive to younger, first-time buyers.
8 Comments
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1. Crunchy said...
The 25 year mortgage will now be reserved for the purchase of a new car.
Put your feet up, It's all getting easier.
2. Crunchy said...
"The saving is likely to be attractive to younger, first-time buyers."
3. uncle tom said...
So you save 15% on the repayments, but have to go on making them for 60% longer..
4. str 2007 said...
When will the people learn that the banks aren't helping them but themselves ?
And really this is one the new coalition should be jumping on to keep things under control.
Just another way of keeping the bubble inflated, how long before the unborn infants get signed up ?
5. Pyracantha said...
Added comment to Mail website. Please click 'green' and/or add your own comment.
6. Urban Bear said...
The (legalised fraud) money creating lenders keep figuring out how to keep us debt slaves for longer, to boost their overall revenue.
Myself, I try to cut my remaining mortgage term each time I renew or change my mortgage, to reduce the time I am a debt slave, and to reduce my total losses from compound interest, given it is not always possible to get a mortgage which allows increased monthly payments without some kind of penalty.
Shorter term mortgages can save a lot of money if you can later get better deals for a lower LTV ratio, however a longer term mortgage could become a significant liability, if there is a penalty for early repayment!
7. tenyearstogetmymoneyback said...
Why would anyone want a Forty Year mortgage when you can have interest only and never have to pay a penny back ?
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