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£120k Interest Only Mortgage At Age 68.

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Family friend with delusions of grandeur and over inflated sense of entitlement wants to purchase gaudy "executive lifestyle" trophy, four bed, three bathroom new build home for himself and wife. Life insurance is £100 p/m. The guy has a modest pension and works part time in Sainsbury's.

Crazy?

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Family friend with delusions of grandeur and over inflated sense of entitlement wants to purchase gaudy "executive lifestyle" trophy, four bed, three bathroom new build home for himself and wife. Life insurance is £100 p/m. The guy has a modest pension and works part time in Sainsbury's.

Crazy?

he probably is.

However, I reported about 2 years ago that a client of mine (60 ish) had 100K IO mortgage on the flat he was living in, and another 100K on a flat he had bought for BTL...very low income, but the pitch was that the BTL would supplement the income...no repayment vehicle inplace, or could be afforded, no tenant when I last called.

the BTL was 2 years old then...that would be about 4 years now...discusting bankers behaviour.

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Family friend with delusions of grandeur and over inflated sense of entitlement wants to purchase gaudy "executive lifestyle" trophy, four bed, three bathroom new build home for himself and wife. Life insurance is £100 p/m. The guy has a modest pension and works part time in Sainsbury's.

Crazy?

He's going to be brown bread in a few years. Why not?

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He's going to be brown bread in a few years. Why not?

depends on the insurance....a significant payout would require a significant premium....£100 per month could be an old term insurance, but running to this age and a long way beyond the payout would be quite small.

and to top it up would be very pricy indeed.

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He's going to be brown bread in a few years. Why not?

At 68 and healthy enough to work in sainsburys, he has a good chance of living for another 15-20 years. Getting into financial trouble now just means that the majority if not all of his remaining time on earth will be spent in absolute poverty.

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depends on the insurance....a significant payout would require a significant premium....£100 per month could be an old term insurance, but running to this age and a long way beyond the payout would be quite small.

and to top it up would be very pricy indeed.

Like I said, he will be dead. He's not going to worry. If the missus is still alive, the government will house her if she loses the house. Why not have something they want for a few short years?

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Like I said, he will be dead. He's not going to worry. If the missus is still alive, the government will house her if she loses the house. Why not have something they want for a few short years?

Sure, I see your logic, but the lender? why? if they cant get the insurance, what benefit? If they start doing this then we could all do it.

It could be just a glorified equity release scheme. But they relied on rising asset values.

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whilst there is no denying that IO mortgages have been abused, in terms of their originally intended use, they do have a place in the wider scheme of things.

I agree with the other person who replied that, at 86 years of age, the guy doesnt have long to be around - so what does he likely care (especially if he has few/no relatives, etc).

Similarly, I have commented here before on this, that I am familiar with one person who, in his mid-30s, sadly has statistically greatly reduced life expectancy and so deliberately has an IO mortgage. The reasoning being that he wont be around to have to pay the capital, is single with no dependents - so what does he care!

He just gets to rent a very nice house for less than it would cost to buy 'properly'.

Edited by anonguest

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Sure, I see your logic, but the lender? why? if they cant get the insurance, what benefit? If they start doing this then we could all do it.

It could be just a glorified equity release scheme. But they relied on rising asset values.

I'm guessing if he's 68 he probably isn't an FTB. He will probably have a house to sell. Assuming the bank have done their homework what's the problem. If I was 68 I would be wanting to have a bit of fun. You could be dead any minute.

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I'm guessing if he's 68 he probably isn't an FTB. He will probably have a house to sell. Assuming the bank have done their homework what's the problem. If I was 68 I would be wanting to have a bit of fun. You could be dead any minute.

Indeed, assuming is what we are doing.

More facts needed Dom, if you please.

The case I reported however, relied on BTL income and low rates at the end of a fixed term teaser. normal income was very low for this person.

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Indeed, assuming is what we are doing.

More facts needed Dom, if you please.

The case I reported however, relied on BTL income and low rates at the end of a fixed term teaser. normal income was very low for this person.

Over the past thirty years they have moved house on average every three years. They started off in a very large town house, half of which was paid for by a wealth relative, and a £7k mortgage. That place would now be worth £400k.

Now, £100k equity. Ironically they are moving from a very nice place they bought in May 07, because they can't manage the mortgage.

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Over the past thirty years they have moved house on average every three years. They started off in a very large town house, half of which was paid for by a wealth relative, and a £7k mortgage. That place would now be worth £400k.

Now, £100k equity. Ironically they are moving from a very nice place they bought in May 07, because they can't manage the mortgage.

thanks

still, nothing wrong with being a dreamer.....it just might come true.

a lot of people do look to wealth creation as a prime reason for ones life...this leads to many losing it all anyway and BTL booms and demands to be rescued.

sad really.

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thanks

still, nothing wrong with being a dreamer.....it just might come true.

a lot of people do look to wealth creation as a prime reason for ones life...this leads to many losing it all anyway and BTL booms and demands to be rescued.

sad really.

Hmm, you're right. It's just that way of life is totally opposed to my own, i.e., saving for things, zero conspicuous consumption, patience with regard investment, etc.

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Reminds me of my parents plan, they knew they could never buy a massive family house outright and therefore planned to hold it for 15 years or so whilst me and my bro+sis where little, then sell it on and move to a small place. They would therefore have the guarantee of staying in their ideal house for as long as we were kids whilst paying "rent" on the money they borrowed.

Things didn't quite go that way in the end, they paid off the mortgage as their income went up. But if they were still paying IO today they be paying back £600 a month on their 80k (or thereabouts) mortgage. Not bad "rent" really for a large 7 bed London town house in a highly desirable area.

I think what really needs to happen in this country is for improved renting rights. Essentially this guy is "renting" money to "rent" a house so that he can stay in control. I don't think this is so bad given my nightmare renting experiences - you don't need to be kicked out on a landlord's whim in your 70s (like I was - except the 70s bit ofc). Renters should be able to stay in a property for as long as they like and LLs should need a VERY good reason to get them removed. Unlike now where thye can just serve you notice.

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Reminds me of my parents plan, they knew they could never buy a massive family house outright and therefore planned to hold it for 15 years or so whilst me and my bro+sis where little, then sell it on and move to a small place. They would therefore have the guarantee of staying in their ideal house for as long as we were kids whilst paying "rent" on the money they borrowed.

Things didn't quite go that way in the end, they paid off the mortgage as their income went up. But if they were still paying IO today they be paying back £600 a month on their 80k (or thereabouts) mortgage. Not bad "rent" really for a large 7 bed London town house in a highly desirable area.

I think what really needs to happen in this country is for improved renting rights. Essentially this guy is "renting" money to "rent" a house so that he can stay in control. I don't think this is so bad given my nightmare renting experiences - you don't need to be kicked out on a landlord's whim in your 70s (like I was - except the 70s bit ofc). Renters should be able to stay in a property for as long as they like and LLs should need a VERY good reason to get them removed. Unlike now where thye can just serve you notice.

yeah, but renters rights would make BTL unattractive. bad for banks, bad for the property market, bad for the economy, bad for the World, bad for the Universe and Allah himself, praise be upon his soul and may he rest in peace.

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Sure, I see your logic, but the lender? why? if they cant get the insurance, what benefit? If they start doing this then we could all do it.

It could be just a glorified equity release scheme. But they relied on rising asset values.

Why should the lender care? If some mug is willing to insure them for £100 a month, the lender can't lose.

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Why should the lender care? If some mug is willing to insure them for £100 a month, the lender can't lose.

where? £100 per month on a 68 year old is bound to loose.....thats £1200 per year premium.

say he lives 20 years....thats only £24,000 on a £120K payout.

even Sibley would work out thats a bad bet.

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where? £100 per month on a 68 year old is bound to loose.....thats £1200 per year premium.

say he lives 20 years....thats only £24,000 on a £120K payout.

even Sibley would work out thats a bad bet.

The banksters have the house as security.

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The banksters have the house as security.

yes, as i said, they could do one of those equity release schemes, but...

Its the Insurance Im concerned about...and the repayments.....its for an IO loan.

Im commenting on the facts provided by the OP.

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yes, as i said, they could do one of those equity release schemes, but...

Its the Insurance Im concerned about...and the repayments.....its for an IO loan.

Im commenting on the facts provided by the OP.

Ah yes, I see what you mean. Waste of money.

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