othello Posted July 21, 2006 Share Posted July 21, 2006 HHmmmmmm a 100yrs fixed with-----CRYOGENICS THE MORTGAGE LENDER------------- Quote Link to comment Share on other sites More sharing options...
brassfarthing Posted July 21, 2006 Author Share Posted July 21, 2006 What's the difference between a 50 year mortgage and renting: Average age of FTB 30-something: average lifespan 70-something. Unlikely to pay it off before you die. With renting you get no security of tenure, for one thing. When you buy, you can do what you want to the property. If you increase the repayments and shortern the term as your earnings increase, you could end up with a 25 year mortgage in any case. Quote Link to comment Share on other sites More sharing options...
othello Posted July 21, 2006 Share Posted July 21, 2006 (edited) Perhaps some lenders will give you a mortgage on your body? Repaid on death. Must be worth a few quid to the wealthy BTL brigade who will be looking for new hearts and brains (and dick extentions). Edited July 21, 2006 by othello Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted July 21, 2006 Share Posted July 21, 2006 Marina, Fantastic post Quote Link to comment Share on other sites More sharing options...
brassfarthing Posted July 21, 2006 Author Share Posted July 21, 2006 Good idea !! why not go for 100 year mortgage then we can let the Granchildren pay of my house ! and more profit for the honest banking system who are the pillars of our society. I am GOING TO BE SICK!!! I should think the grandchildren would be delighted to receive a house with 75% (or whatever) of the debt already paid off. However, if they weren't happy or didn't want to live there, they could sell it and pocket the profit -- assuming that some HPI had occurred over the decades. But in any case, for most average earners, the mortgage would be repaid within a much shorter term than 100 years. Quote Link to comment Share on other sites More sharing options...
Keith.G Posted July 21, 2006 Share Posted July 21, 2006 You buffoon. Think about it a bit more. It seems to me that certain individuals because they are sceptical somehow rate themselves as 'guru' Quote Link to comment Share on other sites More sharing options...
othello Posted July 21, 2006 Share Posted July 21, 2006 With renting you get no security of tenure, for one thing. When you buy, you can do what you want to the property. If you increase the repayments and shortern the term as your earnings increase, you could end up with a 25 year mortgage in any case. Yes, security of tenure - a big issue. Its soooooooooo hard to find a property to rent, after all there are so few of them about. Quote Link to comment Share on other sites More sharing options...
brassfarthing Posted July 21, 2006 Author Share Posted July 21, 2006 I think I'd prefer an "Ignorant" name than display my ignorance in the manner you did with your lunatic suppositions. If only the forum would let me call you a **** then we'd all know what I really think of you! OK, you've got that out of your system. Good. Now then. Any prospect of coming up with a more cogent argument against what I said than anyone else has yet managed? Um. No, I thought not. Yes, security of tenure - a big issue. Its soooooooooo hard to find a property to rent, after all there are so few of them about. Sorry, I don't understand. When you rent, you (typically) have a 6 month guarantee of tenure. As many people have mentioned on this very forum, landlords have a terrible tendency to want to sell the property at some point. If there are a lot of properties available for rent, as you say, then fine, you'll be able to find somewhere else to live, but that isn't the point, is it? You are still being forced to move against your will, and you have the hassle of packing and unpacking and changing your address on everything. Quote Link to comment Share on other sites More sharing options...
MRSB Posted July 21, 2006 Share Posted July 21, 2006 Many on here say, with understandable frustration, that prices have to stop rising because people simply can't go on affording to pay what they pay now. The 50 or the 100 year mortgage is widely derided, but I firmly believe that this is the big new development in the market. If I'm really honest I don't see what's wrong with a 50 year mortgage. It's just a longer time to pay. Yes, you end up paying far more in interest, but you pay far more in interest if you take out a (socially acceptable) 25 year mortgage compared with a 10 year mortgage. A bank loan repayable over 5 years will involve paying more interest than a loan repayable over 2 years. It's how the system works. Imagine this. You take out a 100 year mortgage, with the repayments being relatively low. As the years go on, you earn more money and start to increase your repayments. If you are sensible and lucky, after 15 years you can pay significantly more than the agreed minimum rate, and the house gets paid off in 20 or 25 years in any case. Or take the opposite possibility. You lose your job or fall on hard times. The mortgage payments are so low that you can cope anyway, OR the very affordable overpayments you made earlier in the term will tide you over through a payment holiday for a year or two perhaps. As long as a) the loan is made on the understanding that it can be paid off early with no or low redemption penalty, and that anyone taking out such a mortgage must live in the property and not BTL, then I don't see the problem. I know people will bring up all sorts of objections but think of the main benefit -- that it will allow FTBs to actually afford a decent place, and give them the pleasure of building a home rather than renting and paying off someone else's mortgage for them. Total cr*p, this has nothing to do with FTB's. It's about all the VI's keeping a ridiculous bubble inflated for as long as possible. It's so blatant it's obscene. I cannot believe that ANYONE of sound mind would actually consider this to be a good idea. Quote Link to comment Share on other sites More sharing options...
brassfarthing Posted July 21, 2006 Author Share Posted July 21, 2006 Total cr*p, this has nothing to do with FTB's. It's about all the VI's keeping a ridiculous bubble inflated for as long as possible. It's so blatant it's obscene. I cannot believe that ANYONE of sound mind would actually consider this to be a good idea. I don't mind that you disagree, MSRB, and that you think I'm talking "total crap". No problem. But tell me why you disagree. Quote Link to comment Share on other sites More sharing options...
bearwithaconscience Posted July 21, 2006 Share Posted July 21, 2006 Many on here say, with understandable frustration, that prices have to stop rising because people simply can't go on affording to pay what they pay now. The 50 or the 100 year mortgage is widely derided, but I firmly believe that this is the big new development in the market. If I'm really honest I don't see what's wrong with a 50 year mortgage. It's just a longer time to pay. Yes, you end up paying far more in interest, but you pay far more in interest if you take out a (socially acceptable) 25 year mortgage compared with a 10 year mortgage. A bank loan repayable over 5 years will involve paying more interest than a loan repayable over 2 years. It's how the system works. Imagine this. You take out a 100 year mortgage, with the repayments being relatively low. As the years go on, you earn more money and start to increase your repayments. If you are sensible and lucky, after 15 years you can pay significantly more than the agreed minimum rate, and the house gets paid off in 20 or 25 years in any case. Or take the opposite possibility. You lose your job or fall on hard times. The mortgage payments are so low that you can cope anyway, OR the very affordable overpayments you made earlier in the term will tide you over through a payment holiday for a year or two perhaps. As long as a) the loan is made on the understanding that it can be paid off early with no or low redemption penalty, and that anyone taking out such a mortgage must live in the property and not BTL, then I don't see the problem. I know people will bring up all sorts of objections but think of the main benefit -- that it will allow FTBs to actually afford a decent place, and give them the pleasure of building a home rather than renting and paying off someone else's mortgage for them. Don't get me wrong, I love the debate on here and without people still saying it is the right time to buy it would be boring, because there would be no opposing view. What you are saying sounds fairly reasonable, probably rings true in some people's minds. In response to your argument, I have the following genuine reasons why not to take out a 100 year mortgage: 1) The current (inflated) price has factored into it the imagined benefit of at some stage owning outright the property. For most people that is after about 25 years, usually just in time for retirement. There isn't much point buying otherwise, that is one of the main benefits. Clearly a hundred year mortgage isn't going to be much use in that respect. You may as well rent for less, save the money, and then you really will have something to show for it. 2) If you are thinking that your advantage is that rents will go up in the next 25 years, whereas your buying costs will stay static, think again. In the last 10 years, rents have hardly risen, and may even have fallen. So renting does not present you with a nightmare scenario of rapidly increasing housing costs. Guess what? Your best bet of rapidly increasing housing costs is.... buying on a 100 year mortgage. At that level, with even 7% interest (not unheard of over interest rate cycles), your mortgage payment would go up by 50%. That is a lot of house cost "inflation" in a low inflation climate. 3) Flexibility. Just say that you do lose your job, have children. What makes you think that you will be able to easily make the mortgage payment? At today's prices, you would be locked into a historically high monthly payment. At higher interest rates, the payments would be crippling. And not reducing over time, because you aren't paying off the capital. 4) Security of tenure. Well I can't disagree with this at face value, because the AST is unfavourable towards renters. But for an FTB borrowing a high LTV now, security of tenure relies on being able to make the payments for the full term of the mortgage. And that depends on future salary increases, which may not happen, and stable interest rates for the whole 100 years, which is extremely unlikely. 5) Prices have already gone up way beyond reasonable measures. Gambling on future increases to compensate for all the above drawbacks is just that. Gambling. And with even RICS and some estate agents starting to sound more pessimistic, I don't think there is much smart money going that way. I could be wrong. But on the balance of risk, I know which way I would fall. Quote Link to comment Share on other sites More sharing options...
Keith.G Posted July 21, 2006 Share Posted July 21, 2006 Many on here say, with understandable frustration, that prices have to stop rising because people simply can't go on affording to pay what they pay now. The 50 or the 100 year mortgage is widely derided, but I firmly believe that this is the big new development in the market. If I'm really honest I don't see what's wrong with a 50 year mortgage. It's just a longer time to pay. Yes, you end up paying far more in interest, but you pay far more in interest if you take out a (socially acceptable) 25 year mortgage compared with a 10 year mortgage. A bank loan repayable over 5 years will involve paying more interest than a loan repayable over 2 years. It's how the system works. Imagine this. You take out a 100 year mortgage, with the repayments being relatively low. As the years go on, you earn more money and start to increase your repayments. If you are sensible and lucky, after 15 years you can pay significantly more than the agreed minimum rate, and the house gets paid off in 20 or 25 years in any case. Or take the opposite possibility. You lose your job or fall on hard times. The mortgage payments are so low that you can cope anyway, OR the very affordable overpayments you made earlier in the term will tide you over through a payment holiday for a year or two perhaps. As long as a) the loan is made on the understanding that it can be paid off early with no or low redemption penalty, and that anyone taking out such a mortgage must live in the property and not BTL, then I don't see the problem. I know people will bring up all sorts of objections but think of the main benefit -- that it will allow FTBs to actually afford a decent place, and give them the pleasure of building a home rather than renting and paying off someone else's mortgage for them. The introduction of such products must be further confirmation of the lack of affordability of property. However, given the current circumstances it may be an option for some people as opposed to renting or interest only where no stake in the property is acquired. Also someone who takes out such a long term mortgage could restructure the term or trade the property when the property has grown in value or if the persons financial position improves. Remember everyone that a long term view should be taken when buying property. Even the 'guru's' on this website must think it unlikely that values will go back to those of the 1970's for example. Looking back it would not really matter when a person bought in the 60's or 70's when compared to house values now Quote Link to comment Share on other sites More sharing options...
bearwithaconscience Posted July 21, 2006 Share Posted July 21, 2006 Even the 'guru's' on this website must think it unlikely that values will go back to those of the 1970's for example. Looking back it would not really matter when a person bought in the 60's or 70's when compared to house values now That was in the days of high wage inflation and interest rates. Over time, the capital was eroded away. Now the debt people are taking out is very much real debt. With the way that this govt manipulates things like RPI/CPI, you may find yourself with a debt that is growing in real terms, not shrinking. Quote Link to comment Share on other sites More sharing options...
SCUMBAG Posted July 21, 2006 Share Posted July 21, 2006 Many on here say, with understandable frustration, that prices have to stop rising because people simply can't go on affording to pay what they pay now. The 50 or the 100 year mortgage is widely derided, but I firmly believe that this is the big new development in the market. If I'm really honest I don't see what's wrong with a 50 year mortgage. It's just a longer time to pay. Yes, you end up paying far more in interest, but you pay far more in interest if you take out a (socially acceptable) 25 year mortgage compared with a 10 year mortgage. A bank loan repayable over 5 years will involve paying more interest than a loan repayable over 2 years. It's how the system works. Imagine this. You take out a 100 year mortgage, with the repayments being relatively low. As the years go on, you earn more money and start to increase your repayments. If you are sensible and lucky, after 15 years you can pay significantly more than the agreed minimum rate, and the house gets paid off in 20 or 25 years in any case. Or take the opposite possibility. You lose your job or fall on hard times. The mortgage payments are so low that you can cope anyway, OR the very affordable overpayments you made earlier in the term will tide you over through a payment holiday for a year or two perhaps. As long as a) the loan is made on the understanding that it can be paid off early with no or low redemption penalty, and that anyone taking out such a mortgage must live in the property and not BTL, then I don't see the problem. I know people will bring up all sorts of objections but think of the main benefit -- that it will allow FTBs to actually afford a decent place, and give them the pleasure of building a home rather than renting and paying off someone else's mortgage for them. I think I read somewhere that if you take out a 40 year mortgage then, on a £150k mortgage you’d pay an additional £150k on top of what you would pay on a standard 25 year mortgage. With a mortgage of this size this would be the house you die in as any hope of trading up the ladder will be gone. Frankly, especially when considering the maintenance costs as the house reaches the end of its life, it would make more financial sense to rent long term and enjoy the benefits of renting. The Japanese had 100 year mortgages at the peak of their housing boom. Now their housing market has crashed I don’t think you can get them any more. Banks coming up with silly products like this should indicate that we are nearing the end of this boom. Quote Link to comment Share on other sites More sharing options...
RichB Posted July 21, 2006 Share Posted July 21, 2006 I am not sure what you are trying to acheive with a 50 year mortgage. Perhaps I don't understand you. Would you be saying the 50 year mortgage would be positioned such that the TOTAL interest paid would be the same (or a bit higher than) as a 25 year mortgage (ie dropped to say 2.5% apr from a 25 at 5%)? In that case, I can see that being of benefit. But I am not entirely sure I can see a benefit if the interest rate is the same. Borrowing 250k over 25 years monthly payments (numebrs from Halifax at 5%): Monthly payment for a repayment mortgage: £1,455.61 Monthly payment an interest-only mortgage: £1,037.49 Take that to 40 years Monthly payment for a repayment mortgage: £1,200.65 Monthly payment an interest-only mortgage: £1,037.49 So you 'save' 250 a month for 25 years. But then you lose 1,200 a month for another 15 years. Total cost 576k, against £436k, or an extra 70% of purchase price or so... The longer the period the more diminishing the 'return'. Perhaps a more appropriate mortgage would be an open ended IO only with no payment fees. Quote Link to comment Share on other sites More sharing options...
Marina Posted July 21, 2006 Share Posted July 21, 2006 Sorry, I lost the will to live halfway through your interesting description. I did however, notice your final sentence. Good tactic. If you think it's stupid to take out a 50 year mortgage, then my advice would be: DON'T DO IT. It shouldn't be illegal to say "No thank you, I would prefer a shorter term mortgage. What else can you offer me?" However, it should also not be illegal to consider a 40 or a 50 or a 100 year mortgage if you want it. Don't talk to me about stupidity. There are people out there who put good money on England to win the World Cup. Personally, I think that 25 years is an overlong term for many. Last time I bought a house we took out a 12 year mortgage. Many people would have gone for 20 or 25 years for whatever reason, even if they could afford to pay more. It's arbitrary. Learn, or get advice, and go for what's right for you, but at least give people options. Sorry you fell asleep half way through my discourse - odd really because the idea was to WAKE YOU UP to the reality that a house is just a pile of cheap materials assembled in 12 weeks by a small number of semi-skilled workers. I assumed you didn't realise that because - by even countenancing a 50 year mortgage to buy such a thing you give a 'house' a status and a mystique with no regard whatsoever to it's intrinsic value. Even thinking about a 50 year mortgage is part of the disease. Quote Link to comment Share on other sites More sharing options...
steve99 Posted July 21, 2006 Share Posted July 21, 2006 The Japanese had 50yr mortgages in the 80's when house prices were OTT like they are here now, then everything went wrong and prices headed south for about 15 years or so, now prices are about what they were in 1987. They also were in a frenzy to buy whatever the cost but the novelty eventualy wore off and ultimately they didnt give a damb whether they bought or rented, as will happen here one day, hopefully soon Quote Link to comment Share on other sites More sharing options...
MRSB Posted July 21, 2006 Share Posted July 21, 2006 I don't mind that you disagree, MSRB, and that you think I'm talking "total crap". No problem. But tell me why you disagree. I have told you...this has nothing whatsoever to do with FTB's buying a property..or anyone else for that matter. It is about keeping the bubble inflated ..... if the government were really interested in FTB's they'd regulate lending and these scheme from the VI's, watch affordability and let the market correct... As for my children taking on my loan... I DON'T THINK SO...we've shafted the young enough already! Quote Link to comment Share on other sites More sharing options...
Guest Bart of Darkness Posted July 21, 2006 Share Posted July 21, 2006 This is an obvious and pointless troll post. Maybe Brassy could ask the mods to change his user name to "Methuselah" if he's pushing 100 year mortgages. Quote Link to comment Share on other sites More sharing options...
Ignorant Steve Posted July 21, 2006 Share Posted July 21, 2006 OK, you've got that out of your system. Good. Now then. Any prospect of coming up with a more cogent argument against what I said than anyone else has yet managed? Um. No, I thought not. Anyone who thinks that the length of a mortgage is irrelevant is not worth arguing against. Either you'll re-think for yourself or remain forever foolish. Try asking yourself why all credit card lenders would prefer you to only ever pay the minimum per month. Try calculating the difference per month between a 15 year mortgage and a 50 year mortgage. Woolly headed semantics will get you nowhere. Quote Link to comment Share on other sites More sharing options...
brassfarthing Posted July 21, 2006 Author Share Posted July 21, 2006 Sorry you fell asleep half way through my discourse - odd really because the idea was to WAKE YOU UP to the reality that a house is just a pile of cheap materials assembled in 12 weeks by a small number of semi-skilled workers. I assumed you didn't realise that because - by even countenancing a 50 year mortgage to buy such a thing you give a 'house' a status and a mystique with no regard whatsoever to it's intrinsic value. Even thinking about a 50 year mortgage is part of the disease. Trouble is, like most people on here, you live in La La Land. In your head, you live in a place where you'd like to be, rather than the place we actually are. I'm suggesting a way for people to get on the housing ladder, because most people on here seem to want to do that. I'm dealing with the reality of the situation rather than just the fantasy world we'd all like to live in, where property is cheap and plentiful and high quality. Your argument about the cost of materials and the time taken to create a house is specious. A painting by Picasso would typically take less than a day to create, use about £10 of materials, and be worth... several millions of pounds. You see, it doesn't actually work like that. If you're an ex-builder, I can see why you're so jaundiced, and have so little understanding of the emotional pull of housing. To you, it literally is just bricks and mortar, just as Picasso's painting is just canvas and slimy, coloured oils. Quote Link to comment Share on other sites More sharing options...
faloos Posted July 21, 2006 Share Posted July 21, 2006 I have told you...this has nothing whatsoever to do with FTB's buying a property..or anyone else for that matter. It is about keeping the bubble inflated ..... if the government were really interested in FTB's they'd regulate lending and these scheme from the VI's, watch affordability and let the market correct... As for my children taking on my loan... I DON'T THINK SO...we've shafted the young enough already! On 100 yr mortgages- The house would never be anyones except the banks as the old would have to take equity out of the house to pay for their nursing home etc as my parents had to !! I should think the grandchildren would be delighted to receive a house with 75% (or whatever) of the debt already paid off. However, if they weren't happy or didn't want to live there, they could sell it and pocket the profit -- assuming that some HPI had occurred over the decades. But in any case, for most average earners, the mortgage would be repaid within a much shorter term than 100 years. Brassfarthing - What planet are you on !! Once you have taken a lot of equity out of your home to service nursing home costs etc ( 600 pounds per week each for elderly ) the home then will have to be remortgaged and so on and on. NHS will be privatised by then and then more equity withdrawal to pay these bills . The gov will not have any money as the immigrants population will all qualify for state pensions by then so if you have a home you will have to pay even for the polutted air !! Quote Link to comment Share on other sites More sharing options...
Keith.G Posted July 21, 2006 Share Posted July 21, 2006 I am not sure what you are trying to acheive with a 50 year mortgage. Perhaps I don't understand you. Would you be saying the 50 year mortgage would be positioned such that the TOTAL interest paid would be the same (or a bit higher than) as a 25 year mortgage (ie dropped to say 2.5% apr from a 25 at 5%)? In that case, I can see that being of benefit. But I am not entirely sure I can see a benefit if the interest rate is the same. Borrowing 250k over 25 years monthly payments (numebrs from Halifax at 5%): Monthly payment for a repayment mortgage: £1,455.61 Monthly payment an interest-only mortgage: £1,037.49 Take that to 40 years Monthly payment for a repayment mortgage: £1,200.65 Monthly payment an interest-only mortgage: £1,037.49 So you 'save' 250 a month for 25 years. But then you lose 1,200 a month for another 15 years. Total cost 576k, against £436k, or an extra 70% of purchase price or so... The longer the period the more diminishing the 'return'. Perhaps a more appropriate mortgage would be an open ended IO only with no payment fees. I agree that people would need to be fully aware of what they would actually pay. I'd also say that any 'get-out' charges should be made clear. It seems to me unlikely that people would want this type of mortgage for anything like the full term (unless the interest rate is fixed and rates then go up). It's a way of making a start for a few years before switching when the time is right Quote Link to comment Share on other sites More sharing options...
Keith.G Posted July 21, 2006 Share Posted July 21, 2006 There's nothing particularly wrong with having a 50-year mortgage. I'm just inclined to think "My parents never had to, so WHY THE ****** SHOULD I"? ****ing don't then! The problem is, I see the current reality as little more than a temporary fantasy. You need to stop assuming that today is some 'new reality' that we must all adapt to. Many of us are quite content to wait for more realistic opportunities tomorrow than devise imaginatively dangerous schemes in an attempt to better ourselves today. Sometimes, patience can be the best approach. Ah....but what if it is not a temporary fantasy? For example, what if we are moving towards a society where the majority of people rent? Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted July 21, 2006 Share Posted July 21, 2006 ****ing don't then! Ah....but what if it is not a temporary fantasy? For example, what if we are moving towards a society where the majority of people rent? Then labour will be out at next election with a huge defeat!! Quote Link to comment Share on other sites More sharing options...
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