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redwing

35+ Year Mortgages

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[Tried to post this on the News Blog an hour ago, but no luck so it'll have to go in here.]

Headline: Life saver - or a life sentence?

Front page of money section and all of page 3 given over to this story. In the print version there's also a handy table to show how much more you pay back with very long term mortgages.

It's a balanced article that states the facts nicely and leaves you to make up your own mind (if it hasn't been made up already :) )

Here's a taster:

Growing numbers of first-time buyers desperate to get on the housing ladder but struggling to afford sky-high house prices are being encouraged to tie themselves into mortgages lasting 35, 40 or even 45 years.

With today's buyers requiring ever-larger home loans, some banks and building societies have come up with a clever trick for bringing the dream of home ownership within their reach: increasing the term of the loan in order to reduce the monthly payments.

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[Tried to post this on the News Blog an hour ago, but no luck so it'll have to go in here.]

Headline: Life saver - or a life sentence?

Front page of money section and all of page 3 given over to this story. In the print version there's also a handy table to show how much more you pay back with very long term mortgages.

It's a balanced article that states the facts nicely and leaves you to make up your own mind (if it hasn't been made up already :) )

Here's a taster:

This is a perfectly acceptable tool used to gain home ownership, as long as it is used correctly it is not a problem.

There is no need to allow the term to carry 40 years, it is possible to re-schedule to end at an earlier point in time if/when your financial circumstances improve & you can afford to pay more.

I guess the danger is taking a 40 year IO on the basis that house prices always rise so will substitute a pension & allow payback of capital.

Even this opinion is not to be wholly discounted as it may indeed be the case!

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My attitude has always been if you can't afford to buy a property with a 25 year repayment mortgage (especially with rates as low as they are) then you can't afford it. Period.

...

To overstretch yourself when prices are at record income multiples and interest rates are at historic lows sounds like a sure fire recipe for financial disaster.

It makes sense to gear enormously at the bottom of the cycle, but it's madness at the top.

Of course the crowd will say otherwise.

What I find most alarming is that many of the people buying houses now will not be able to afford a respectable pension.

Oh silly me, their house is their pension.

Even if this bubble doesn't pop quickly, we will be living with it's ugly legacy in 25 years when many homeowners can't afford to eat.

Edited by BandWagon

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Only 35 years you can get much longer than that in Japan.... even pass it onto your kids. Nice present :D

However they can still make sense as long as the repayment is still comparable to paying rent. Its just the banks being creative since they have to keep lending money. They need profits and if they cut of the money supply then house prices decline which they dont want as their own money could be put at risk.

Edited by DONT PANIC !!! DONT PANIC !!!

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I'd rather nail my **** to a passing bus than take on a 40 year mortgage :blink:

When are you doing it? Please get someone to film it and stick it on here - I could do with a good laugh.

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My attitude has always been if you can't afford to buy a property with a 25 year repayment mortgage (especially with rates as low as they are) then you can't afford it. Period.

Buy something smaller and then if/when your financial circumstances improve, move up to something bigger.

To overstretch yourself when prices are at record income multiples and interest rates are at historic lows sounds like a sure fire recipe for financial disaster.

A 25 year mortgage is a figure we have grown up with, with life expectancy increasing, & possibly later retirement maybe this figure could be revised?

As you state, high prices now, but if they drop, a 40 year mortgage could be the way to afford a better life style than could be otherwise enjoyed, having the positive benefit of allowing consumer spending to buoy the economy & levels of employment.

Oh, & keep banking profits indecently high.

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There will always be stories such as this, he bought at peak market perhaps, the property is worth less NOW, but in a few years time it may be worth double & youngsters will be deriding him & telling him how lucky he is.

That's what has happened here in England to people who had huge negative equity in the 90s.

Then they were laughed at, ha ha, bought too late.

Nowadays they are the lucky ones who were fortunate enough to have bought at the right time.

Timing, timing, timing.

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There will always be stories such as this, he bought at peak market perhaps, the property is worth less NOW, but in a few years time it may be worth double & youngsters will be deriding him & telling him how lucky he is.

That's what has happened here in England to people who had huge negative equity in the 90s.

Then they were laughed at, ha ha, bought too late.

Nowadays they are the lucky ones who were fortunate enough to have bought at the right time.

Timing, timing, timing.

Yes, but...

The Japanese property market hasn't recovered yet. After more than 10 years in the doldrums. The guy in the article is still in negative equity. But at least with a 100 year mortgage it might be out of negative equity by the time the loan matures.

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Timing Timing Timing - - Couldnt agree more which is why im keeping my powder dry. I would even be prepared to buy if there were clear signs that the market was on the way up but would then watch it like a hawk. Personally i dont think it will but i know when to accept when im wrong.

...but i do feel sorry for that bloke. From experience i know that a japanese long commute can mean 1.5 hrs. Its a long time to think about your past mistakes. Its all very well investing long term but in the long term were all dead...however on a happier note maybe the third generation recipient of the bank loan will be eternally greatfull :D

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Yes, but...

The Japanese property market hasn't recovered yet. After more than 10 years in the doldrums. The guy in the article is still in negative equity. But at least with a 100 year mortgage it might be out of negative equity by the time the loan matures.

With a 100 year mortgage he may well be living in a very nice pad indeed at a lower price than if he rented it.

His monthly disposable income increased as a result, aiding the consumer economy.

What problem is there in negative equity to him?

He must really like it there to have moved so far, if he likes living there & can easily afford the payments, no problem.

Only our pre concieved notions lend an air of despondancy to the tale.

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With a 100 year mortgage he may well be living in a very nice pad indeed at a lower price than if he rented it.

His monthly disposable income increased as a result, aiding the consumer economy.

What problem is there in negative equity to him?

He must really like it there to have moved so far, if he likes living there & can easily afford the payments, no problem.

Only our pre concieved notions lend an air of despondancy to the tale.

Negative equity may not be a problem for him and thats a very positive outlook but on the other hand if he didnt buy he could now afford two of those apartments. Or one apartment closer to Tokyo. 10 years and the "investment" halved in value. In another 5 it may be back at the original price Another 5 and it may have broken even given opportunity costs etc. (thats 20 years after he bought the thing). In 30 years it may look a good investment but at the moment it looks VERY BAD.

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Negative equity may not be a problem for him and thats a very positive outlook but on the other hand if he didnt buy he could now afford two of those apartments. Or one apartment closer to Tokyo. 10 years and the "investment" halved in value. In another 5 it may be back at the original price Another 5 and it may have broken even given opportunity costs etc. (thats 20 years after he bought the thing). In 30 years it may look a good investment but at the moment it looks VERY BAD.

The article quotes his circumstances, which to an outsider may appear bleak, there is no indication that he himself is unhappy with the lifestyle he has, although the journalistic bent attempts to make it seem that he should be wallowing in the depths of misery.

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When are you doing it? Please get someone to film it and stick it on here - I could do with a good laugh.

I've been trying it all day long, but I keep missing the bus. I think I need to change tactic and nail it to a bus that's just about to move off. Just went for a piss - my **** is like a garden sprinkler now - wee all over the place :blink:

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I've been trying it all day long, but I keep missing the bus. I think I need to change tactic and nail it to a bus that's just about to move off. Just went for a piss - my **** is like a garden sprinkler now - wee all over the place :blink:

Here is some porn to keep you in the mood...

http://www.regent9.ic24.net/

(why do I get the feeling I am missing out on something here...?)

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(why do I get the feeling I am missing out on something here...?)

because you might have missed this post....

I'd rather nail my **** to a passing bus than take on a 40 year mortgage :blink:

:rolleyes:

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I'd rather nail my **** to a passing bus than take on a 40 year mortgage :blink:

Based on buses on my journey it will take some time before you experience any pain

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I've been trying it all day long, but I keep missing the bus. I think I need to change tactic and nail it to a bus that's just about to move off. Just went for a piss - my **** is like a garden sprinkler now - wee all over the place :blink:

I've got the phone number of a clarinet teacher. He'll be able to teach how to hold your ****. :ph34r:

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  • 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%



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