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Interest Only Mortgages Phased Out, Replaced By %1 Repayment And 99% Interest Only

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Apparently this is a thing, so glad they are cracking down on io.

This is apparently what a friend of a friend signed up for, mid 40s and borrowing 6 times wages.

So glad banks have learnt their lesson and being more careful now.

I thought they were bringing them back.

renting, with risk.

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Banks aren't interested in repayment, they want to collect the mortgage interest then have the property back with an inflated retail price.

I don't think thats true, banks are notoriously bad at repossessing and selling houses its not something they even try to do well.

More likely is that they only look at returns over a 3-5 year period, beyond that - "who cares, I'll be in a different job".

In the past lending more by using IO at low rates meant more sales and more short term profit.

Right now with low turnover, increasing interest rates a little probably won't make any great difference to the number of sales, but does give a short term boost in income and may also flush out a few highly leveraged/bad risks to move to alternative lenders.

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Anybody got an example of this, or (awesomely) a hard link.

Not trying to be one of those people who has to fact check and then insult everybody for missing off fact 3 ( b ) - this just sounds so unbelievably crazy that I find myself believing it.

edited for auto-insert of smiley.

Edited by Kinky John

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Apparently this is a thing, so glad they are cracking down on io.

This is apparently what a friend of a friend signed up for, mid 40s and borrowing 6 times wages.

So glad banks have learnt their lesson and being more careful now.

A hard link would be good - if only for those regulators on here to then trot along to the bank in question to ask some people about the capital risk weightings applied. Wouldn't it be jolly japes if they had been put in the 'standard repayment' bucket in reports to regulators. Fines.....luverly fines.....

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From the Kensington Mortgage Company web site


http://

www.kmc.co.uk/mortgages/calculators/part-and-part-calculator

It allows you to put in any percentage as the repayment percentage of the part and part mortgage - whether they would in practice accept 1% is another matter of course.

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