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Interest-only mortgage problems

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Actually this is quite interesting. As usual a quick google search gives some indication as to whether this report was PR-led or journalist-led. It turns out that the studio guest, Dean Mirfin, has been in the industry press promoting the lender's (Santander) hookup with his employer, an equity release lender.

Quote

Equity release is being hailed as the potential saviour of thousands of borrowers who are reaching the end of their interest-only mortgage, so is the market finally about to come of age?

Santander gave the sector its seal of approval in July in a landmark deal with Legal & General and Key Retirement to offer its borrowers lifetime mortgages. This, as well as proposals from the regulator to create a standalone exam for advisers, is pushing equity release out of the shadows and into the spotlight.

Redeeming features

There were around 1.7 million pure interest-only mortgages outstanding at the end of 2015, according to the Council of Mortgage Lenders, with a further 500,000 existing on a part interest-only, part-repayment basis.

Key Retirement group director Dean Mirfin believes equity release can assist a number of these borrowers who have no repayment vehicle in place.

“The Santander deal is a recognition that, for older borrowers, equity release must feature more when addressing the interest-only issue,” he says.

Source: Cover feature: Lifetime opportunity, Mortgage Strategy, 26 October 2016

 

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48 minutes ago, Grumpysod said:

I posted this earlier, just been allowed for some reason.

You can already see the protests  with these people playing the victim, even though they knew it was 'interest only' along with the 'time to maturity'.

The case for not throwing them out will be that they were too thick to understand, and do you know what, in this day and age there is a good chance that argument might stand up in the courts.

Clue is in the name. How can that be mis sold :lol:

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We're slowly moving into a long anticipated endgame.

Back in 2013 the early indication was that the lenders might keep rolling the loans, but this is clearly not the case here. If the banks are going to be offering a couple of years grace and then calling in the loans that is a big deal.

Edited by Bland Unsight

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The CML put some figures out in June 2014,and nothing further since then. I've been well-served by the rule of thumb that when it comes to CML PR, "No news is bad news". Last time the CML put out data they said there were 2.8m interest-only mortgages out  there, with 980,000 due for repayment before 2020. 

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With brexit, the govt and banks simply can't afford to indulge d1ckheads anymore.

 

Hahahahahahaha... 

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4 minutes ago, Lord D'arcy Pew said:

People really should read a document that involves a sum of £152,000.00

If not ask a responsible adult to take a look.

Responsible adults and uk housing market purchase decisions? 

You might as well act like Diogenes and his lamp because you'll be searching a while.

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5 hours ago, Bland Unsight said:

Actually this is quite interesting. As usual a quick google search gives some indication as to whether this report was PR-led or journalist-led. It turns out that the studio guest, Dean Mirfin, has been in the industry press promoting the lender's (Santander) hookup with his employer, an equity release lender.

Source: Cover feature: Lifetime opportunity, Mortgage Strategy, 26 October 2016

 

Thanks, Interesting.

 

With respect to R4 ... 4.30 in In VID :rolleyes:

http://www.bbc.co.uk/programmes/b080mhd6

 

After letting her bluster & give her excuses ....It's written in big bold letters on your contract ..(you muppet ! ) 

Edited by Saving For a Space Ship

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OMG...

"Who would've thought that interest only wouldn't go on forever".

Then she goes on to contradict herself complaining that they never offered her a deal where she could pay off some of the capital (yes dear, that's called a capital and interest repayment mortgage, you didn't sign up for one of those!)

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5 minutes ago, electrogear said:

OMG...

"Who would've thought that interest only wouldn't go on forever".

Then she goes on to contradict herself complaining that they never offered her a deal where she could pay off some of the capital (yes dear, that's called a capital and interest repayment mortgage, you didn't sign up for one of those!)

The insanity is so wide you can't go around it and so deep you can't cross it.

When she bought she could presumably only 'afford' interest-only because at that point SVRs were about 7%, hence repayment terms were out of reach, given the house price and given her income.

Now, largely as a direct consequence of a deep balance sheet recession caused by this idiotic borrowing and lending, some borrowers with significant amounts of equity are able to access incredibly low mortgage rates.

Hence she concludes that a solution to the her problem is that she might be allowed to switch to a repayment mortgage at those same incredible low rates.

There is this minor matter of repaying the capital. There was talk of the fact that her mortgage is split between her and her son IIRC. Let's say it's half each. At present she's paying 4.5% on about £150k, that's £6,750 pa and her share is thus £281 pcm. Let's say she can re-finance to 2%. The interest cost goes down to £125 pcm leaving a princely £156 to chip away at the principal, her share of which is £75,000, so all paid off in a mere 480 months, which is 40 years, at which point she'll be 110 years old.

It's the innumeracy that always amazes me. So much for homo economicus, behold homo f*ckwitus

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36 minutes ago, Bland Unsight said:

The insanity is so wide you can't go around it and so deep you can't cross it.

When she bought she could presumably only 'afford' interest-only because at that point SVRs were about 7%, hence repayment terms were out of reach, given the house price and given her income.

Now, largely as a direct consequence of a deep balance sheet recession caused by this idiotic borrowing and lending, some borrowers with significant amounts of equity are able to access incredibly low mortgage rates.

Hence she concludes that a solution to the her problem is that she might be allowed to switch to a repayment mortgage at those same incredible low rates.

There is this minor matter of repaying the capital. There was talk of the fact that her mortgage is split between her and her son IIRC. Let's say it's half each. At present she's paying 4.5% on about £150k, that's £6,750 pa and her share is thus £281 pcm. Let's say she can re-finance to 2%. The interest cost goes down to £125 pcm leaving a princely £156 to chip away at the principal, her share of which is £75,000, so all paid off in a mere 480 months, which is 40 years, at which point she'll be 110 years old.

It's the innumeracy that always amazes me. So much for homo economicus, behold homo f*ckwitus

I suppose it's not so ridiculous that HPI idiots might expect deals like this, given the precedent that the banks and government have set over the last decade or so, but the bank have given that stupid hag 2 years notice to sort something out (i.e. sell the damn thing or switch to a different lender) and now she's panicking as she's only got 4 weeks left. The only people sympathising will be other HPI idiots.

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19 hours ago, Bland Unsight said:

The insanity is so wide you can't go around it and so deep you can't cross it.

When she bought she could presumably only 'afford' interest-only because at that point SVRs were about 7%, hence repayment terms were out of reach, given the house price and given her income.

Now, largely as a direct consequence of a deep balance sheet recession caused by this idiotic borrowing and lending, some borrowers with significant amounts of equity are able to access incredibly low mortgage rates.

Hence she concludes that a solution to the her problem is that she might be allowed to switch to a repayment mortgage at those same incredible low rates.

There is this minor matter of repaying the capital. There was talk of the fact that her mortgage is split between her and her son IIRC. Let's say it's half each. At present she's paying 4.5% on about £150k, that's £6,750 pa and her share is thus £281 pcm. Let's say she can re-finance to 2%. The interest cost goes down to £125 pcm leaving a princely £156 to chip away at the principal, her share of which is £75,000, so all paid off in a mere 480 months, which is 40 years, at which point she'll be 110 years old.

It's the innumeracy that always amazes me. So much for homo economicus, behold homo f*ckwitus

It's not very often I shout at the radio..........but really why is this a news story?

 A naive woman who apparently doesn't understand basic financial concepts borrowed too much money on an interest only basis and as a result has been living in a flat that she couldn't really afford for the last 10 years.  Her bank has given her two years to sort out the mess but she's done nothing so she's now going to be repo'd - this is hardly a surprise is it?  In other news bears found defecating in woods. 

Why should anyone care? 

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On 10/29/2016 at 0:09 PM, Bland Unsight said:

We're slowly moving into a long anticipated endgame.

Back in 2013 the early indication was that the lenders might keep rolling the loans, but this is clearly not the case here. If the banks are going to be offering a couple of years grace and then calling in the loans that is a big deal.

mSmF4o8LT36ec.gif

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Ah yes, the sob stories have begun. I mean i initially posted in other threads about the "Human Victim," stories that would emerge close up to the BTL-Tax changes from whiny landlords, but oh how did I miss this f'in nugget of news about IO's.

I know many people on these IO owner occupier mortgages. Most are absolute idiotic twaats who would love to be BTL-118ers but never quite got the hang of it and have no plan for the capital repayment. Others have let-out the house without telling the Lender.

Others just got a good deal and have cashed in the HPI since

Can we see this IO repayment issue fitting in nicely with the BTL-changes over the next few years and will they combine to kick a much needed HPC into gear? We can but hope. God speed.

 

 

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Oh, fffs.  I was mis-sold an endowment. Sucked it up when I realised that it wasn't going to pay ou to cover the capital and started overpaying. Wish now I'd just started bleating and the government might have picked up the tab. The fecking should have, or at least the bar stewards that sold the thing should have 

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3 hours ago, Exiled Canadian said:

It's not very often I shout at the radio..........but really why is this a news story?

 A naive woman who apparently doesn't understand basic financial concepts borrowed too much money on an interest only basis and as a result has been living in a flat that she couldn't really afford for the last 10 years.  Her bank has given her two years to sort out the mess but she's done nothing so she's now going to be repo'd - this is hardly a surprise is it?  In other news bears found defecating in woods. 

Why should anyone care? 

+1 Agree, I won't waste my time listening to this nonsense anymore! (Actually, the story about the bear going to toilet sounds more interesting :P)

Edited by renting til I die
Typo

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20 hours ago, One-percent said:

Oh, fffs.  I was mis-sold an endowment. Sucked it up when I realised that it wasn't going to pay ou to cover the capital and started overpaying. Wish now I'd just started bleating and the government might have picked up the tab. The fecking should have, or at least the bar stewards that sold the thing should have 

Me too.  Took the hit and learned a (very expensive) lesson -  never to have any truck with the personal finance industry.  It prompted me look more closely at personal pension plan I had with Scottish Widows and realised that this was heading the same way,  any growth being consumed by charges and trail commissions paid to the FA who pushed it. Cashed it in,  set up a SIPP and never looked back.

 

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9 minutes ago, Simon Taylor said:

Me too.  Took the hit and learned a (very expensive) lesson -  never to have any truck with the personal finance industry.  It prompted me look more closely at personal pension plan I had with Scottish Widows and realised that this was heading the same way,  any growth being consumed by charges and trail commissions paid to the FA who pushed it. Cashed it in,  set up a SIPP and never looked back.

 

I do not trust anyone or anything with financial in the title.  My old man sold insurance door to door. He told me in the early eighties not to take out an endowment. He was at the bottom of the food chain in financial services and he knew. This was in the good old days when companies were meant to be a little more honest. Gawd knows what they are up to now.

i am told to take out a sip, but don't trust enough to do that.  At least I'm not as untrusting as grandparents generation who would keep money at home rather than trust the banks, although I'm going that way :blink:

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