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More Mortgage Ageism And Interest Only

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Some snippets:

Like many parents, Eric and Muriel Fisher were keen to help their children buy their first homes. So in 2005, they borrowed £92,000 from Halifax to provide deposits and assistance to their five offspring.
The mortgage they took out was interest-only, meaning their monthly payments would not reduce the capital owed and the debt would remain at £92,000.
Their own home is now worth around £650,000, so the risk to Halifax looks minimal as the Fishers have no other mortgage on the property.
Yet the couple have been told the loan must be repaid next year when Mr Fisher turns 75.
Historically, interest-only deals were sold to people who promised to pay into an investment that would cover the debt at the end of the term.
But the seeds of a crisis were sown in the Nineties when first Cheltenham & Gloucester Building Society (now part of Lloyds Banking Group), then other lenders, stopped asking for proof of a repayment product.
The reasons were twofold: less administration for the lender; and more mortgages could be sold, thanks to the lower monthly costs of interest-only.

Shawbrook Bank chief executive Steve Pateman says the bank is developing a product that will allow people to extend interest-only mortgages deep into retirement.

The most exciting area of development is lifetime mortgages. Several major lenders told Money Mail that they are working on loans you can take to the grave. These would work a bit like so-called equity release - except the debt won't increase every year.
Borrowers and lenders will both benefit from the security of fixed payments throughout retirement. But due to the added risks to lenders, the rates will be higher than on conventional fixed-rate mortgages. Competition should squeeze the costs down over time.
Some lenders are already offering loans along these lines unofficially.
A Yorkshire Building Society spokesman says: 'Although we do not formally offer lifetime mortgages, in cases where older or vulnerable interest-only customers do not have an adequate repayment vehicle, we can consider extending the mortgage term on a rolling basis indefinitely.'
Remember, your lender wants you to repay the money - because that is what you will have agreed to do, whether or not this was clearly explained to you at the time you borrowed the money.

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Sounds like Steve Pateman could give a professional satirist a run for their money. Thanks God we have people like him in positions of responsibility or we would be really scewed.

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People borrow money, on the condition that they pay the interest then repay the capital. Have decided they don't actually want to repay the capital

Hope they get repossessed.

So many idiots have just ignored the huge capital repayment required at the end of an IO mortgage....

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"The most exciting area of development is lifetime mortgages. Several major lenders told Money Mail that they are working on loans you can take to the grave."

If these f*8*rs want to play that game then I have been working on my "exit strategy" too.

I decided if this continues, this unabated greed , then I plan to die leaving behind the most epic amount of debt possible. This is the only way I can "win" is to go the full kamikaze!

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People borrow money, on the condition that they pay the interest then repay the capital. Have decided they don't actually want to repay the capital

Hope they get repossessed.

So many idiots have just ignored the huge capital repayment required at the end of an IO mortgage....

Absolutely. I don't know if it's simple idiocy, or willful ignorance, but no reasonable person could think borrowing large sums, and not planning to pay it back, was a good idea.

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Bank in wanting its money back shocker!

I assume they agreed to pay back the money next year as there is no suggestion in the article that this isn't the case. I also find it very difficult to believe that the paperwork would not have been very clear in 2005 about the interest only nature of the loan.

'There was no age limit discussed at the time I took the mortgage and I assumed I would just be able to keep extending it,' Mr Fisher says.

You're an idiot.

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Hah, got to love the 'explanation' in the article:

It meant borrowers could stretch their finances to afford a better home.

They couldn't afford anything, much less the one they decided to rent from the bank rather than owning.

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" to keep extending it", implies the term of the loan previously expired and was extended, but now they won't do it again because he's nearly 75?

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Where the hell does it end?? Special 3 month IO mortgage product for stage 4 cancer patents. "I lived 4 months and now Ive got to pay for it :( "

Edited by beccles

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Absolutely. I don't know if it's simple idiocy, or willful ignorance, but no reasonable person could think borrowing large sums, and not planning to pay it back, was a good idea.

Sorry to break the united front, but can anyone explain the rage expressed? How has the bank lost out if the mortgage is extended until they die? I'm assuming they'll be paying a fair rate of interest. The bank makes money by lending it - that's why they're there.

Does it say anywhere that the borrowers do not intend to repay the loan?

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Sorry to break the united front, but can anyone explain the rage expressed? How has the bank lost out if the mortgage is extended until they die? I'm assuming they'll be paying a fair rate of interest. The bank makes money by lending it - that's why they're there.

Does it say anywhere that the borrowers do not intend to repay the loan?

The banks want their money back as I'm sure the terms suggest. Where is the problem with that?

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