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Ted D. Bear

Interest-only Mortgage Holder Behaviour

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Hi,

Is anyone aware if there has been any study done into the proportion of people with interest-only mortgages actually making provision to pay off the principle, or are most IO mortgage people relying on continued HPI?

I had an interesting meeting with an American chap from an insurance company this afternoon. Apparently in the US you can now get IO mortgages where your monthly payments are a fraction (50% I think he said) of the interest owed, leaving you with the principle and the other half of the interest to pay off in a lump sum :o . As far as I'm aware you can't get these in the UK yet... and I hope it stays that way... I have no doubt there would be enough muppets pile on board, reigniting HPI again!

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You could get em last time round. 'Low Start Mortgages'. The interest just got rolled up for 2 years, when, of course, you salary would have risen so much, the payments wouldnt be a problem. HAHAHAHA...

I can laugh now, but I ALMOST fell for it - almost took out a £75,000 loan for a stinking tiny 1 bed flat in Shepherds Bush. Survey fell thru and I gave up.

Good thing too. I could have eventually got it for about £35,000 a couple of years later, where it languished till about 1998. Phew.

All together now, to the tune of Heaven 17 (80s Icons)

"Its happening all over again..."

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Apparently in the US you can now get IO mortgages where your monthly payments are a fraction (50% I think he said) of the interest owed, leaving you with the principle and the other half of the interest to pay off in a lump sum :o

That's right, they're known as negative amortisation mortgages.

As far as I'm aware you can't get these in the UK yet... and I hope it stays that way... I have no doubt there would be enough muppets pile on board, reigniting HPI again!

They don't seem to be over here in a big way, although I haven't asked mortgage broker. They may have another name (as CIUW pointed out).

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As an American, I have to say, we Americans are in soooooo much trouble. :( It seems to me we are in much deeper than your guys.

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As an American, I have to say, we Americans are in soooooo much trouble.  :( It seems to me we are in much deeper than your guys.

I dunno about that Karen. I am British, but living in the US. The UK never had a recession from 2000 - 2003 like the US did (moderately). I think this is why the UK real estate market has been going crazy for a long long time (around 10 years now).

frugalista

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As an American, I have to say, we Americans are in soooooo much trouble.  :( It seems to me we are in much deeper than your guys.

Then you should compare prices/properties/incomes! :D The US has had a crazy property boom, that's for sure, but the current UK one makes even it look sane. Try looking at some of the postings on HPC that show what you can get in the US for the same price as what you have to pay in the UK. Crazy money in the US would at least still get you a house; in the UK it would get you a 'shoebox' on the 'wrong side of the tracks', if you know what I mean. :D

Nomadd

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I dunno about that Karen. I am British, but living in the US. The UK never had a recession from 2000 - 2003 like the US did (moderately). I think this is why the UK real estate market has been going crazy for a long long time (around 10 years now).

frugalista

I'm with you there fruge,

karen,you guys in the states had it lucky,the 2001-03 downturn your jobless figure was rising,helping to keep a lid on the REALLY rampant HPI we did......now your empoyment rates are picking up,most people feel confident about buying on the back of these price rises,over the other side of the pond ....we have jobless figures RISING PLUS FALLING PRICES.

you folks stateside will have a reasonable soft landing in housing,NO WAY we will!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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