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Pay Off Our Mortgages


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Rather than give banks our tax so they can eventually lend it back to us at interest why not us that same money to pay off chunks of everyone mortgage? Anyone having purchased a property in at least the last 5 years probably paid too much due to too much credit pushing prices up.

On the positive:

The banks get the money they need, just the same.

Their bad loans are reduced.

The borrowers have smaller monthly repayments and therefore more to spend and less defaults.

Some people would be back in positive equity.

Those remortgaging would have better LTV.

The government would be so popular they would surely be voted back in.

On the negative:

Some people would be rather offended if their tax was spent on paying off ninja loans which were perhaps made fraudulently.

The government would be so popular they would surely be voted back in.

It seems overall banks are going to get money from us anyway so why not give it to them this way and at least people benefit from it directly.

What would the economic repercussions be?

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Dumb. You know better than to put your neck out with this kind of question.

For starters....

If all loans were suddently paid off by the government, all banks as we know them today would cease to exist. Economic consequences would be apocalyptic and unimaginable. I shudder to think what would happen actually.

Look into fractional reserve banking, money creation, real estate contract, capitalism, communism, usury and tax.

Next, if it was possible for the state to pay of your mortgage, and everybody elses, then the only discriminator would be the articles inside of the house. The notion of property wealth or equity would cease to exist, as would money in our sense of the word. The only assets you would have would be a)yourself (if with title), and b)possessions contained within that house.

Playing upon that notion....if the government paid out more for your outstanding mortgage, and less for your neighbor, you would be further indebted to the state. Is that what you want? Really?

Now, in order for a government to start putting people freely in houses, they would have to assume that everybody was in equal standing, akin to a communist doctrine. This as we know as Western born and bred, is not a good thing. Maybe in that scenario, a single person would be allocated a 1 bedroom city flat. Your 3 bedroom house would be allocated to a family with two children. If you were a singleton living in a two bed, you would be relocated to a 1 bedroom, location choosen by the state. All houses would have to coform to state standards. Etc....

Finally, YOU, and YOU alone entered into a contract with your morgaging financial organization. Government policy was put in place to regulate this transaction, but it was YOU who signed the bottom line. YOU agreed to pay X amount for Y property.

If you feel YOU overpaid for it, well sir, YOU should have done your homework. I feel your pain if you are in negative equity of course, but nobody ever said life was easy. Everything in life is a gamble.

If we are going to go down the fantasy road....I would rather the government paid for a solid two week vacation, in the location of my choosing, with a budget of my choosing, every year for the rest of my life. Ciao.

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Thanks for your answer. It was a dumb question, far too obvious but I didn't mind sticking my neck out. I have not seen anyone else ask.

If the government paid everyone's mortgages then sure everyone would go for the biggest house they could get, that would be a mess. That would be like bailing out incompetents and frauds. It would not work and to continue doing so would require terrible regulation. Except of course they bail out banks. But then they are owned by them and run by them and move to and from employment in them...

You know though, certain middle east states do just this. If a person has not paid their mortgage in within a given amount of time then the Sheik pays them off.

But I'm not suggesting they do this all the time. We are all being fleeced here. Even those who did not go to the party are helping clean up the mess. Those who had their variable rate mortgages in the 80's, went through high interest rates then and are on fixed incomes been stitched up twice.

And I did see this coming. Mainly because I read this site. I did not in anyway overstretch and I am not in negative equity (although time may change that). If I lived in a different town then I would have needed to borrow far more to purchase and would probably not have done so. Plenty of other people did though. While you are right that no one has forced anyone to take out loans I would say the market has been manipulated up and I don't think there was any option but to pay higher prices.

Now the conservatives say they will keep house prices under control. So that means anyone in negative equity will have a long wait until they get out. I've read about fractional reserve, interest usury etc. If money as we know it changed I think we might have a chance but it won't. No they will never pay our mortgages.

Its all in the names:

Labour - You are a tired worker, come and have a big party with us. If you are not worker already you will be once we have finished.

Conservatives - Now that Labour have put a chain around your ankle we will conserve it - its for your own good.

Dumb. You know better than to put your neck out with this kind of question.

For starters....

If all loans were suddently paid off by the government, all banks as we know them today would cease to exist. Economic consequences would be apocalyptic and unimaginable. I shudder to think what would happen actually.

Look into fractional reserve banking, money creation, real estate contract, capitalism, communism, usury and tax.

Next, if it was possible for the state to pay of your mortgage, and everybody elses, then the only discriminator would be the articles inside of the house. The notion of property wealth or equity would cease to exist, as would money in our sense of the word. The only assets you would have would be a)yourself (if with title), and b)possessions contained within that house.

Playing upon that notion....if the government paid out more for your outstanding mortgage, and less for your neighbor, you would be further indebted to the state. Is that what you want? Really?

Now, in order for a government to start putting people freely in houses, they would have to assume that everybody was in equal standing, akin to a communist doctrine. This as we know as Western born and bred, is not a good thing. Maybe in that scenario, a single person would be allocated a 1 bedroom city flat. Your 3 bedroom house would be allocated to a family with two children. If you were a singleton living in a two bed, you would be relocated to a 1 bedroom, location choosen by the state. All houses would have to coform to state standards. Etc....

Finally, YOU, and YOU alone entered into a contract with your morgaging financial organization. Government policy was put in place to regulate this transaction, but it was YOU who signed the bottom line. YOU agreed to pay X amount for Y property.

If you feel YOU overpaid for it, well sir, YOU should have done your homework. I feel your pain if you are in negative equity of course, but nobody ever said life was easy. Everything in life is a gamble.

If we are going to go down the fantasy road....I would rather the government paid for a solid two week vacation, in the location of my choosing, with a budget of my choosing, every year for the rest of my life. Ciao.

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Thanks for your answer. It was a dumb question, far too obvious but I didn't mind sticking my neck out. I have not seen anyone else ask.

If the government paid everyone's mortgages then sure everyone would go for the biggest house they could get, that would be a mess. That would be like bailing out incompetents and frauds. It would not work and to continue doing so would require terrible regulation. Except of course they bail out banks. But then they are owned by them and run by them and move to and from employment in them...

You know though, certain middle east states do just this. If a person has not paid their mortgage in within a given amount of time then the Sheik pays them off.

But I'm not suggesting they do this all the time. We are all being fleeced here. Even those who did not go to the party are helping clean up the mess. Those who had their variable rate mortgages in the 80's, went through high interest rates then and are on fixed incomes been stitched up twice.

And I did see this coming. Mainly because I read this site. I did not in anyway overstretch and I am not in negative equity (although time may change that). If I lived in a different town then I would have needed to borrow far more to purchase and would probably not have done so. Plenty of other people did though. While you are right that no one has forced anyone to take out loans I would say the market has been manipulated up and I don't think there was any option but to pay higher prices.

Now the conservatives say they will keep house prices under control. So that means anyone in negative equity will have a long wait until they get out. I've read about fractional reserve, interest usury etc. If money as we know it changed I think we might have a chance but it won't. No they will never pay our mortgages.

Its all in the names:

Labour - You are a tired worker, come and have a big party with us. If you are not worker already you will be once we have finished.

Conservatives - Now that Labour have put a chain around your ankle we will conserve it - its for your own good.

Doesn't matter if debt is or isn't written off as it is being written off NOW. It can't be paid back so banks are being nationalised. It either happens quickly or slowly. Which would you prefer?

I suppose government thinks slowly would be preferable so as to allow very strong inflation to reduce the debt burden and get business going again. Savers get fcuked either way.

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Next, if it was possible for the state to pay of your mortgage, and everybody elses, then the only discriminator would be the articles inside of the house. The notion of property wealth or equity would cease to exist, as would money in our sense of the word. The only assets you would have would be a)yourself (if with title), and b)possessions contained within that house.

Playing upon that notion....if the government paid out more for your outstanding mortgage, and less for your neighbor, you would be further indebted to the state. Is that what you want? Really?

Now, in order for a government to start putting people freely in houses, they would have to assume that everybody was in equal standing, akin to a communist doctrine. This as we know as Western born and bred, is not a good thing. Maybe in that scenario, a single person would be allocated a 1 bedroom city flat. Your 3 bedroom house would be allocated to a family with two children. If you were a singleton living in a two bed, you would be relocated to a 1 bedroom, location choosen by the state. All houses would have to coform to state standards. Etc.

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Rather than give banks our tax so they can eventually lend it back to us at interest why not us that same money to pay off chunks of everyone mortgage? Anyone having purchased a property in at least the last 5 years probably paid too much due to too much credit pushing prices up.

On the positive:

The banks get the money they need, just the same.

Their bad loans are reduced.

The borrowers have smaller monthly repayments and therefore more to spend and less defaults.

Some people would be back in positive equity.

Those remortgaging would have better LTV.

The government would be so popular they would surely be voted back in.

On the negative:

Some people would be rather offended if their tax was spent on paying off ninja loans which were perhaps made fraudulently.

The government would be so popular they would surely be voted back in.

It seems overall banks are going to get money from us anyway so why not give it to them this way and at least people benefit from it directly.

What would the economic repercussions be?

So, ipso facto, capital values are reduced (but only for those in neg equity presumably). Wouldn't work IMHO-they have tried it here in the US and abandoned it as unfair to the prudent. What happens a few years down the road? The person who had his mortgage reduced will probably be the first to cash in if prices rise again (by taking out a second, home equity LOC or whatever). Could even fuel another mini-boom unless you could somehow repay the guvmint (A.K.A. the taxpayer) by taking back the dough if any resale resulted in a gain. Would the reduction be a land charge and would this be under privity of contract or privity of estate? In other words would the charge be registered to cease with the death (or sale) of the current owner or would it run with the land if the reduction wasn't paid off at first conveyance. Would RPI come in to it? Complicated.

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You know, now that I think about it, there has been a similar scheme in the UK for quite some time now. I'm referring to the right to by component of the UK Housing Act 1980.

This legislature allowed the nations Joe-bag-of-doughnuts to buy into real estate and start the massive mortgage market, with a state subsidised discount, which in effect is having a portion of your mortgage covered by the taxpayer. I reckon this bit of Thatcher legacy has been one of the big reasons why the UK housing market has been out of control, as it never put in the exit clause restricting the sale of property and controlling profit; it effectively raised the living standard of the lower class into a pseudo middle class, and punished savers and the proud independently minded working class. A massive amount of poor, uneducated, and lazy people were suddenly handed big bags of cash with the discounted mortgages, and this wave of nouveau rich have been running amok ever since, while those refusing to lower themselves to state handouts were pushed aside. Yes, there are those who deserve a handout, but the majority didn't.

I am all for socialism, but there has to be parity across the board. That housing act is definitely one of the pillars of Basket Case Britain.

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You know, now that I think about it, there has been a similar scheme in the UK for quite some time now. I'm referring to the right to by component of the UK Housing Act 1980.

This legislature allowed the nations Joe-bag-of-doughnuts to buy into real estate and start the massive mortgage market, with a state subsidised discount, which in effect is having a portion of your mortgage covered by the taxpayer. I reckon this bit of Thatcher legacy has been one of the big reasons why the UK housing market has been out of control, as it never put in the exit clause restricting the sale of property and controlling profit; it effectively raised the living standard of the lower class into a pseudo middle class, and punished savers and the proud independently minded working class. A massive amount of poor, uneducated, and lazy people were suddenly handed big bags of cash with the discounted mortgages, and this wave of nouveau rich have been running amok ever since, while those refusing to lower themselves to state handouts were pushed aside. Yes, there are those who deserve a handout, but the majority didn't.

I am all for socialism, but there has to be parity across the board. That housing act is definitely one of the pillars of Basket Case Britain.

You are right, and even now I hear of people trying to rent with the aim of buying at a discount later. But complaining of the lengthy queues for renting now! Amazing. :rolleyes:

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  • 2 months later...

Hello, all. I am new to this forum, and hope my question fits the theme.

Does anyone here have the patience to explain a basic about UK mortgages to a hapless foreigner?

In the U.S., most home mortgages are fixed. You know exactly how much you'll be paying every month for the life of the mortgage, often 30 years.

But after studying the website thisismoney.co.uk, I'm finding that even what you call "fixed rate", isn't - at least not for long:

"If you have stretched yourself in trying to buy a property or if you are someone who likes the security of knowing your repayments won't change, then a fixed-rated deal is probably for you. However...rates on fixed rate deals are higher than for variable special offers and many lenders have high fees for their best deals.

Two-year fixed rates are the most popular with British homeowners, but increasing numbers of borrowers are turning to longer term fixed rates of five or ten years."

So, when the five or ten years are finished, your payment may go up? I must be missing something. If the bank rate shoots up for some reason, then even your "fixed rate" mortgage can become unaffordable. I would be so grateful for some explanation.

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Hello, all. I am new to this forum, and hope my question fits the theme.

Does anyone here have the patience to explain a basic about UK mortgages to a hapless foreigner?

In the U.S., most home mortgages are fixed. You know exactly how much you'll be paying every month for the life of the mortgage, often 30 years.

But after studying the website thisismoney.co.uk, I'm finding that even what you call "fixed rate", isn't - at least not for long:

"If you have stretched yourself in trying to buy a property or if you are someone who likes the security of knowing your repayments won't change, then a fixed-rated deal is probably for you. However...rates on fixed rate deals are higher than for variable special offers and many lenders have high fees for their best deals.

Two-year fixed rates are the most popular with British homeowners, but increasing numbers of borrowers are turning to longer term fixed rates of five or ten years."

So, when the five or ten years are finished, your payment may go up? I must be missing something. If the bank rate shoots up for some reason, then even your "fixed rate" mortgage can become unaffordable. I would be so grateful for some explanation.

I think you have understood it perfectly.

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Thank you, Erat. (Spooky picture!)

Okay, now I understand that there's no knowing what may happen to one's mortgage payment after the initial period has expired. So one must re-finance to keep some control.

Given this fact, and given the name of this forum string - it makes sense that one would wish, in certain circumstances, to pay off the mortgage early if possible. But somewhere I read that this cannot be done in the UK. (In New York, it is illegal for a lender to penalize a borrower who pays off or pays down the loan.)

Is my information right? Is a UK borrower actually prevented from paying off a loan whose monthly payments may explode at any time? (This may be worse than I think!)

JLH

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Thank you, Erat. (Spooky picture!)

Okay, now I understand that there's no knowing what may happen to one's mortgage payment after the initial period has expired. So one must re-finance to keep some control.

Given this fact, and given the name of this forum string - it makes sense that one would wish, in certain circumstances, to pay off the mortgage early if possible. But somewhere I read that this cannot be done in the UK. (In New York, it is illegal for a lender to penalize a borrower who pays off or pays down the loan.)

Is my information right? Is a UK borrower actually prevented from paying off a loan whose monthly payments may explode at any time? (This may be worse than I think!)

JLH

Depends on the conditions stated in the mortgage. Most prohibit repayment within a period of time that is identical to any teaser rate.

Forgive my naivity about the US but as I understood it teaser rates and subsequent re-sets were a big part of the recent problem over there? i.e. a lot of people were not taking out mortgages at a rate that would apply for the life of the mortgage. Also that in many states people are able to walk away from their mortgage without penalty (jingle mail I believe it's called?).

Seems to me there are big problems on both sides of the pond.

UM

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Depends on the conditions stated in the mortgage. Most prohibit repayment within a period of time that is identical to any teaser rate.

Forgive my naivity about the US but as I understood it teaser rates and subsequent re-sets were a big part of the recent problem over there? i.e. a lot of people were not taking out mortgages at a rate that would apply for the life of the mortgage. Also that in many states people are able to walk away from their mortgage without penalty (jingle mail I believe it's called?).

Seems to me there are big problems on both sides of the pond.

UM

Dear Ursa,

No question there are problems here as well; but the naivete is not yours, but of those who sign mortgage agreements without reading the terms carefully. The re-set, or 'balloon' mortgages, do have an attractive initial rate, but after a set period revert to the prevailing rate. Why someone would agree to this knowingly (other than an incorruptible optimist) is beyond me. Many have lost their homes when the rate ballooned. (Others lost their homes when they lost their jobs or health coverage, which is another story.) It is much safer to take a fixed rate mortgage, which remains fixed for the life of the loan, often 30 years; if these rates are not manageable, one should not be buying property.

Not sure of your reference, "able to walk away from their mortgage without penalty". What do, you mean, 'walk away'? Pay it off, or abandon the home? I have never heard the term 'jingle mail' but will look it up.

JLH

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I apologize for the idiotic sound of this question and hope it doesn't reflect too badly on my intelligence --

I'm beginning to contact mortgage institutions to begin learning about obtaining a mortgage. I have a response from Woolwich, a person who would much rather speak to me by phone, but I'm overseas and want to email instead.

I'm completely unable to get through to Halifax, however. Their website is impenetrable; no email address is given for inquiries, and I would have actually to apply for a mortgage to make any online contact. Does some kindhearted person in this forum have e-mail contact information for any mortgage officer at Halifax - or at any other institution you might recommend?

Thanks very much,

JLH

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