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Extended Mortgages 30, 50 Year Etc


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A friend recently said

"you do realise that banks are now offering longer term mortgages, 30 years and upwards so that will support the property market going forward"

me "what do you think an interest only mortgage is then?"

Him "what do you mean"

me "well you choose, its effectively 30, 50 or more years as you never pay off the debt"

Him "Oh I see what you mean"

Its amazing just how gullable most of the public are.

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A friend recently said

"you do realise that banks are now offering longer term mortgages, 30 years and upwards so that will support the property market going forward"

me "what do you think an interest only mortgage is then?"

Him "what do you mean"

me "well you choose, its effectively 30, 50 or more years as you never pay off the debt"

Him "Oh I see what you mean"

Its amazing just how gullable most of the public are.

Yes but IOM's still have a term, they have to be paid of by a capital repayment at the end of the term.

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Guest Baffled_by_it_all

EA I went to view a property with was quacking on about 'bi-generational' mortgages. He said, 'when they come in the market's going to go wild.'

He then told me he'd got a massive IO mortgage to buy the biggest place he could afford.

Obviously he believes what he's shovelling...

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No bank is going to lend over more than 30, maybe 35 years. 50 years is right out, debt cannot be passed on to the next generation.

passing debt onto the next generation was standard in Japan for a bit (40-50 yr mortgages).

Until property lost 40% of it's value in nominal terms, that is

050618_anglos_vs_Japan.gif

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100k motgage at 10%

over 25years £908 month total £272,610

over 50years £839 month total £503,463

can't see much point!

..and I can't see much point in showing figures with 10% IR.

If you went with 10yr fixed at 4.7% the figures would be £433 vs £567 which equates to a useful £134pm saving. (repayment mortgage)

If the 50yr mortgage allowed overpayment then you could have extra flexibility each month to the tune of £134pm.

For example, if you are doing well with your income you can up the monthly payments to the same as the 25yr mortgage. If you get some big bills in you can drop back to the lower payments. This may suit people who are self employed and on a less than steady income each month.

(assuming you can actually get a 50yr mortgage with 10yr fixed at 4.7%, that is!!!)

Edited by Without_a_Paddle
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..and I can't see much point in showing figures with 10% IR.

If you went with 10yr fixed at 4.7% the figures would be £433 vs £567 which equates to a useful £134pm saving. (repayment mortgage)

If the 50yr mortgage allowed overpayment then you could have extra flexibility each month to the tune of £134pm.

For example, if you are doing well with your income you can up the monthly payments to the same as the 25yr mortgage. If you get some big bills in you can drop back to the lower payments. This may suit people who are self employed and on a less than steady income each month.

(assuming you can actually get a 50yr mortgage with 10yr fixed at 4.7%, that is!!!)

I agree with wap on this, the term is irrelevant if you make a conscious effort to pay the loan down asap. Instead of the average age of the FTB being 35 it could revert back to 25...food for thought <_<

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