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frederico

I would like to change to interest only!

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https://www.avforums.com/threads/moving-to-interest-only-mortgage-not-that-simple.2138275/

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my idea was to sell up and down size I currently have the equivalent of a 6 bed house with the in laws living with us. Not wishing them away but 

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Our fixed term ended and we had 27 years left, but with planning a second baby and maternity leave we wanted more flexibility. We've gone with First Direct and got the longest term possible to take us up to 68 years old.

Nothing to worry about if you lose your income or rates go up.

People seem to think nothing will ever go wrong, just borrow more for longer innit, still the boe will be pleased, prosperity for ever.

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24 minutes ago, frederico said:

From the post at the link:

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I was under the impression it would be a fairly straight forward process, but from the lenders I've seen all require £90,000 - £100,000 income a year to qualify (which is more than the actual mortgage i have!) - i don't earn over this anyway so don't qualify.

Any advice with this and my situation?

(Emphasis added)

What you need there pal is a time machine.

Sadly, I think this thread is probably a little too bit anecdotal for HPTE (could have been added to one of the interest-only timebomb threads) but top quality content for the Anecdotal sub-forum.

 

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'I'm currently on a fixed mortgage which ends early next year. My wife is pregnant and is planning to stay off work for the next year so was thinking of changing to a interest only mortgage for 1-2 years. Then when she's back at work change this back to a standard repayment (we would also likely look to take out a bigger mortgage and buy a bigger house)

I was under the impression it would be a fairly straight forward process, but from the lenders I've seen all require £90,000 - £100,000 income a year to qualify (which is more than the actual mortgage i have!) - i don't earn over this anyway so don't qualify.

Any advice with this and my situation? '

'We've just done this. Our fixed term ended and we had 27 years left, but with planning a second baby and maternity leave we wanted more flexibility. We've gone with First Direct and got the longest term possible to take us up to 68 years old.'

Now, these are not loons at P118, just everyday people.

What I find scariest about the OP is he wants a bit of flexibility from a laon thats less than 90k! Even if it 99k, he's struggling to pay (assuming 25Y) ~500/m.

And he wants to borrow more money FFS!

 

 

 

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Problem: too much DEBT

Solution: more DEBT

 

Because if everyone is doing something, you should be doing more of it!

 

Brainwashing programme bought to you by the disgusting beeb and establishment media. 

Edited by thewig

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Plenty of threads like this on MSEs mortgage forum. The other recurring favourites are 'will i get a btl mortgage. Ive heard now is the perfect time to start' and 'how do i buy my (boomer) parents home and rent it back to them- they cant afford to mortgage' and ' how do i excercise my parent/grandparents right to buy on their council house so i can have it once they die'

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2 hours ago, regprentice said:

Plenty of threads like this on MSEs mortgage forum. The other recurring favourites are 'will i get a btl mortgage. Ive heard now is the perfect time to start' and 'how do i buy my (boomer) parents home and rent it back to them- they cant afford to mortgage' and ' how do i excercise my parent/grandparents right to buy on their council house so i can have it once they die'

In he North I still variations of the following, and its very hard to describe the lunacy/delusion by it,.

' I cant sell my house .... OK, (son/dughter/cousin) have bought it off me.'

You look and there's no sale and theyve not moved out. so I go - I thought xxx bought your house?

Oh, they cant sell their or afford the mortgage. So when they sell theirs and have some more money, theyll buy ours.

Its fuxxing insane. These people ware well past prime earnings. No pension nothing. Theyll not get a mrotgage' their current mortgage is normally an IO one too.

Its like Im in an asylum sometimes.

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5 hours ago, thewig said:

Problem: too much DEBT

Solution: more DEBT

Yes of course.  Our debt is their wealth.

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Looks like someone who posts at AVforums has compared IO mortgages to commercial bridging loans ;)

It's not easy to find proof that you're not allowed to cite "sale of the property" as a repayment plan any more though. I thought that was well and truly banned now. Why can't I find a reference when I need one!

 

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8 minutes ago, mrtickle said:

Looks like someone who posts at AVforums has compared IO mortgages to commercial bridging loans ;)

It's not easy to find proof that you're not allowed to cite "sale of the property" as a repayment plan any more though. I thought that was well and truly banned now. Why can't I find a reference when I need one!

 

AFAIK they don't check the validity of claims made about where the repayment funds are coming from. My ex boss got an IO loan a couple of years ago on the basis of his pension lump sum being the repayment vehicle and said he was not asked for any documentation to prove his claim.  

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7 hours ago, Confusion of VIs said:

AFAIK they don't check the validity of claims made about where the repayment funds are coming from. My ex boss got an IO loan a couple of years ago on the basis of his pension lump sum being the repayment vehicle and said he was not asked for any documentation to prove his claim.  

IO are basically dead for 99% of OOO.

You might get one if you are Prince William. Other than that, the answer is No these days.

The current batch of IO - of which most are in London/SE are tomorrows problem, which is rapidly becoming today.

The problem for IO mortgage holders and writers is that Basel3 hates them - regulated banks should not be writing non amortising loans.

Thje new rules will basically require banks to hold a huge lump of capital for IO loans, forcing them to raise the price of the loan.

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If io is dead for oo why are the BTL people still able to get it?

BTL people don't even need a job in order to remortgage with hundreds of thousands in debt, from people I know.

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On 06/12/2017 at 10:57 PM, Confusion of VIs said:

AFAIK they don't check the validity of claims made about where the repayment funds are coming from. My ex boss got an IO loan a couple of years ago on the basis of his pension lump sum being the repayment vehicle and said he was not asked for any documentation to prove his claim.  

My point is that I could have sworn that now, you are no longer allowed to say "I'll sell the house and downsize, innit" when asked "how are you going to pay us back".

But try as I might, I can't find this written down. I thought it was official.

Can anyone find it please?

 

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23 hours ago, Bsmf said:

If io is dead for oo why are the BTL people still able to get it?

BTL people don't even need a job in order to remortgage with hundreds of thousands in debt, from people I know.

They are unregulated.

Most of the IO BTL being sold in the past 5-7 years has been going to people with enough equity to cover the BTL loan.

You do need an income stream to ermortaage.

The mortgage lending that occurred pre 2008 just does not exist any more, not by a long shot.

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1 hour ago, spyguy said:

They are unregulated.

Most of the IO BTL being sold in the past 5-7 years has been going to people with enough equity to cover the BTL loan.

You do need an income stream to ermortaage.

The mortgage lending that occurred pre 2008 just does not exist any more, not by a long shot.

From the people I know they are getting remortgages with just 25% equity and the income from the BTL counts as the income stream. The train there is still going full speed ahead.

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13 minutes ago, Bsmf said:

From the people I know they are getting remortgages with just 25% equity and the income from the BTL counts as the income stream. The train there is still going full speed ahead.

25% equity is not too bad.

The BTL rent needs to be halved as S24 will see most increased taxes.

No, BTL loans are now in full speed crash. Just watch the numbers of new loans coming out.

And wait for the announcement from Coventry and Nationwide that they are no longer writing BTL loans.

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On 08/12/2017 at 9:30 AM, spyguy said:

25% equity is not too bad.

The BTL rent needs to be halved as S24 will see most increased taxes.

No, BTL loans are now in full speed crash. Just watch the numbers of new loans coming out.

And wait for the announcement from Coventry and Nationwide that they are no longer writing BTL loans.

You mean the income counted on from BTL will half with s24?

They don't seem to be applying that at the moment and have allowed someone I know with no job to get a 5 year fix. Maybe in the past he would have made money on io after paying tax, but from next tax year and 50% s24 no way will it even be posative even before any unexpected expenses occur.

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20 minutes ago, Bsmf said:

You mean the income counted on from BTL will half with s24?

They don't seem to be applying that at the moment and have allowed someone I know with no job to get a 5 year fix. Maybe in the past he would have made money on io after paying tax, but from next tax year and 50% s24 no way will it even be posative even before any unexpected expenses occur.

It all depends on the detail.

Banks are pushing it when there's no earned income.

However if there's enough equity in your acquaintances OO then they might think theyve got their asses covered.

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On 08/12/2017 at 12:21 AM, mrtickle said:

My point is that I could have sworn that now, you are no longer allowed to say "I'll sell the house and downsize, innit" when asked "how are you going to pay us back".

But try as I might, I can't find this written down. I thought it was official.

Can anyone find it please?

 

It is in the MMR but summarised here :

https://www.mortgagefinancegazette.com/features/interest-only-mortgages-in-the-post-mmr-world-06-03-2014/

 

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If you have the appetite for risk then going onto an interest only mortgage at this point is actually not a completely stupid thing to do. The interest part of my mortgage is about 35% (from memory) of the repayment and the rate of that interest is 1.7%. If I wanted to, I could instead go interest only at about 2% and shove the rest into a stocks and shares ISA ETF earning between on average 5% dividends and capital gains. It's free money. Of course the risk is that interest rates rise at the same time as the stock market tanks, and I'm left exposed with a higher repayment and not wanting to sell down the portfolio while it's at a low. I don't have the appetite for quite so much risk so I stick to a repayment mortgage, but I don't overpay.

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We are obviously in a central bank driven low interest rate mal investment bubble of just about everything.

Given the rise of bitcoin, it seems the central banks are going to do very little to change this.

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  • 407 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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