Jump to content
House Price Crash Forum
rollover

11,000 homeowners are at risk of losing their properties after being trapped on interest-only mortgages

Recommended Posts

Quote

 

More than 80,000 interest only mortgages will finish in the next 12 months

But more than one in eight of these borrowers have no way to pay back the debt 

Millions of the deals were sold in the 1980s and 1990s as homeowners were told rises in house prices would cover the debt

Daily mail

 

What was unclear and people didn't understand about IO mortgages?

Share this post


Link to post
Share on other sites
6 minutes ago, rollover said:

What was unclear and people didn't understand about IO mortgages?

I bought one and am not too stupid. They never told me it was interest only and if they did I would not have understood that it had implications 25 years from now. 

It was just like pcp cars now, they kept me focused on the monthly payments. All I knew was that if I signed here here here and here I could buy a house and afford to pay it back every month. 

Yes it was stupid but I was only 20 odd and never done anything like buying a house before. 

Share this post


Link to post
Share on other sites
1 hour ago, rollover said:

Millions of the deals were sold in the 1980s and 1990s as homeowners were told rises in house prices would cover the debt

If people were told this, then this prediction was theoretically correct, however I wonder whether the same assumption that house prices would rise would be stated by the banks when handing out the credit nowadays.

Thinking about it, was it the banks who told them this? That would probably not be in their interests. In fact, I think the communication was almost bound to have been "its your responsibility to pay back the loan element". House price rises may have been presumed, and even used by the banks to sell credit, but they would never put this in their small print.

Share this post


Link to post
Share on other sites

What's the problem. Most of them will have seen huge HPI so they can sell and use what is left to buy elsewhere. They basically got a a house for free.

Share this post


Link to post
Share on other sites
53 minutes ago, leonardratso said:

at 15+ i think i would have understood the IO bit.

You say that, but not really. It's one thing understanding the basic concepts of how things are bought and sold, quite another deciphering a large wodge of small print, especially when the counterparty has an interest in you not understanding it. Mine was not just an IO, it was an ugly package of endowment, IO, and personal loan from developer.

Not defending IO but it could work if done with full understanding and eyes open. People who bought them don't deserve a bailout but they also don't deserve to be talked about as if they were thick neanderthals. 

Share this post


Link to post
Share on other sites

but the house prices have increased 10 fold since the 90's... I don't see what the big deal is. Sell and buy something outright. A house purchased in the 80's for £50,000 is now worth £500,000... no big deal 🤣

Share this post


Link to post
Share on other sites
6 minutes ago, maverick73 said:

but the house prices have increased 10 fold since the 90's... I don't see what the big deal is. Sell and buy something outright. A house purchased in the 80's for £50,000 is now worth £500,000... no big deal 🤣

What kind of fukwad couldn't have saved up 50k in that time on an IO mortgage (even if they stuffed it in a mattress) is beyond me. They don't need sympathy, they need a cat o' nine tails.

Share this post


Link to post
Share on other sites
3 hours ago, rollover said:

What was unclear and people didn't understand about IO mortgages?

Well these were endowments.

The level of lies, deception and fraud were shocking.

Combine endowment scandle with pension and you have these reason why the uk life companies - employers of several 10k people mainly in the South - just does not exist anymore.

Id give people a pass on endowment. But they have been well warned for 10+ years.

Share this post


Link to post
Share on other sites
3 hours ago, Funn3r said:

I bought one and am not too stupid. They never told me it was interest only and if they did I would not have understood that it had implications 25 years from now. 

It was just like pcp cars now, they kept me focused on the monthly payments. All I knew was that if I signed here here here and here I could buy a house and afford to pay it back every month. 

Yes it was stupid but I was only 20 odd and never done anything like buying a house before. 

I can tell you the pitch, as ive heard it recalled from loads of people.

Itll pay off the mortgage and give a nice lump sum for a nice car and family holiday.

My parents had one in 79. Finished in 2003ish. It had about 200 surplus over the very low money borrowed - 8k.

A older lady at work had one, bought in 89. Actually she had a rrpayment bjt a neighbour worked at a life company. On a loan of 45k, the policy missed by 20k.  She was in hysterics when the final projection came in, in the last couple of years. I spent 2 weeks going thru the reclaim process. We got the 20k shortfall.

People should have gone to jail.

Share this post


Link to post
Share on other sites
1 hour ago, Funn3r said:

You say that, but not really. It's one thing understanding the basic concepts of how things are bought and sold, quite another deciphering a large wodge of small print, especially when the counterparty has an interest in you not understanding it. Mine was not just an IO, it was an ugly package of endowment, IO, and personal loan from developer.

Not defending IO but it could work if done with full understanding and eyes open. People who bought them don't deserve a bailout but they also don't deserve to be talked about as if they were thick neanderthals. 

Ftom 86 to 98ish it was nigh on impossible to buy anything but an endowment.

Share this post


Link to post
Share on other sites
2 hours ago, fru-gal said:

What's the problem. Most of them will have seen huge HPI so they can sell and use what is left to buy elsewhere. They basically got a a house for free.

They won't even have to do that, there'll be huge levels of forbearance, the banks will just allow them to extend and pretend 

Share this post


Link to post
Share on other sites
1 hour ago, maverick73 said:

but the house prices have increased 10 fold since the 90's... I don't see what the big deal is. Sell and buy something outright. A house purchased in the 80's for £50,000 is now worth £500,000... no big deal 🤣

Ahh. I can see where youre going wrong.

I know of several - and i mean several - who took out loans of several 10k in the 90s. And now, almost 20 years later, have mortgages of well over 200k.

You didnt think people were spending earned money after 2003ish did you?

Share this post


Link to post
Share on other sites

I have sympathy here with the ‘older generation’.

my first property purchase was in1993, we knew we wanted a repayment mortgage, so we headed to the EA to meet their Scottish widows ‘advisors’.

for twenty minutes she went on and on about endowments, I’d already got three tiny ones as advised by my dad (just come out in March 😂) which were just independant. 

I eventually got a second to say, all well and good but I want a repay...

the words hardly escaped me before she said

’do you work for nothing?’

to which I replied 

‘yes’ sometimes (being a market trader then)

i thought she thought I was winding her up so after we both combusted and I told her to ‘f’ herself we walked away from the whole deal and the agent who hadn’t done anything wrong missed a sale.

i think what the youngest on here imply sometimes is that we were all a bit slow but actually I don’t think I could demonstrate a point of hard sell any better, she had no intention of even discussing a repayment mortgage, none at all, that’s what most of us were dealing with back then.

Share this post


Link to post
Share on other sites

With profit endowments that received an annual bonus that could not be taken away and a big terminal bonus would have paid most of a mortgage off if not all of it....... endowments generally were not index linked so another way of saving should have been undertaken or part of the mortgage converted to a repayment, if people felt the endowment would not cover completely....people were regularly given estimations of how much of the investment would cover mortgage at the end of term..........but thousands cashed them in before time and spent the cash, or stopped paying towards them......some people want all the cake and eat it......personal accountability of actions.....fail to plan, plan to fail......;)

Edited by winkie

Share this post


Link to post
Share on other sites

ok fair enough, i can see where the financial instrument could be wrapped and wrapped and wrapped again so you might not know what the hell you are signing up for, the only hard sell ive ever encoutered (besides cars) was PPI on loans/credit cards. If the seller couldnt explain or at least give me a yes/no direct answer to very simple questions, or would not take a simple 'no' to offered optional extras, then ive basically just stood up and walked away without signing anything. Its a pain now actually because im the only person i know that hasnt been able to claim PPI payments back, because i always said no to it and if they werent going to offer me anything without them then i did without the whole lot. After the GFC i was getting a lot of calls off lloyds bank because i had a fat wodge in my current account, they were for ever trying to flog me sheeet. I remember telling one of them 'oh i forgot about that, i best shift it somewhere better' - I hadnt forgotten but they werent happy with me implying there bank was a piece of sheeet.

Share this post


Link to post
Share on other sites
2 hours ago, azal777 said:

I have sympathy here with the ‘older generation’.

my first property purchase was in1993, we knew we wanted a repayment mortgage, so we headed to the EA to meet their Scottish widows ‘advisors’.

for twenty minutes she went on and on about endowments, I’d already got three tiny ones as advised by my dad (just come out in March 😂) which were just independant. 

I eventually got a second to say, all well and good but I want a repay...

the words hardly escaped me before she said

’do you work for nothing?’

to which I replied 

‘yes’ sometimes (being a market trader then)

i thought she thought I was winding her up so after we both combusted and I told her to ‘f’ herself we walked away from the whole deal and the agent who hadn’t done anything wrong missed a sale.

i think what the youngest on here imply sometimes is that we were all a bit slow but actually I don’t think I could demonstrate a point of hard sell any better, she had no intention of even discussing a repayment mortgage, none at all, that’s what most of us were dealing with back then.

Hat off. Very fair and informative post afaict.

Share this post


Link to post
Share on other sites
2 hours ago, spyguy said:

Ahh. I can see where youre going wrong.

I know of several - and i mean several - who took out loans of several 10k in the 90s. And now, almost 20 years later, have mortgages of well over 200k.

You didnt think people were spending earned money after 2003ish did you?

Well if they cannot afford to pay it out..

They sell up... simple.... no need for ramification of PPI loans as they get compensation from the lenders.

Share this post


Link to post
Share on other sites
5 hours ago, winkie said:

With profit endowments that received an annual bonus that could not be taken away and a big terminal bonus would have paid most of a mortgage off if not all of it....... endowments generally were not index linked so another way of saving should have been undertaken or part of the mortgage converted to a repayment, if people felt the endowment would not cover completely....people were regularly given estimations of how much of the investment would cover mortgage at the end of term..........but thousands cashed them in before time and spent the cash, or stopped paying towards them......some people want all the cake and eat it......personal accountability of actions.....fail to plan, plan to fail......;)

Good points winkie.  Endowments were actually quite a good deal when you factored in the Life Insurance element, not always a cheap option if obtained independent of a financial product like an Endowment Policy.  There was much bleating about Endowment miss-selling but I think they were pretty good - as long as you kept paying up to the full term.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.