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NJP

40 Year Mortgage

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A friend of mine has just told me that he's moving to a flat in Bristol with his pregnant girlfriend. He earns £12k a year, so I assumed he'd be renting, but it turns out the bank has lent them £120k over 40 years.

No idea what their joint income is, but she's a nursery nurse.

I can't see any way this won't leave them broke for the rest of their lives...

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That's a tragic story....

Over the full term, assuming they don't remortgage, that's going to cost them an extra £70K and fifteen years to pay off. And they save about £125 a month for doing that - £580 versus about £705 - even with a sprog on the way, if they are that strapped for cash.....

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What's more, a couple with kid might reasonably think about moving on to larger place in 5 years. By rough calculation their capital ammount will only have been reduced by 5k in that time and they could easily spend that ammount in moving house anyway. IMO the selling of 40 year mortgages and IO mortgages will be subject to investigation in years to come.

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...in years to come....

The Government should be acting now to stop the overselling of morgages to aid the banks profit margins and at the same time destroy the UK economy..

People should only be able to borrow 3.5 times their VERIFIED salary..and joint couples 2.5 times....

This is historical levels that the market is able to cope within...

When the market now faces these IO morgages and 7x salaries and 40 years morgages...look how well the housing market is performing and how well the economy is performing..strangely linked I assume!!

although we all know it takes the Government about 10-15 years re-actively to act even though everyday they probably get warning letters sitting on their desk..unfortunately they are out playing lawn bowls, croquet or polo to care about us little people.

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The moment i first heard about INTEREST ONLY mortgages , i thought arrrr , financial scandal of the future , once all these poor , knieve saps realise thev'e been sold a dummy there all be crying , and saying they didn't understand , of course the banks know what there doing there just simply taking the p**s out of anyone that bought one . I do feel sorry for many who took these rip off mortgages out as we were all clueless once , it's just that many never learn .

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The moment i first heard about INTEREST ONLY mortgages , i thought arrrr , financial scandal of the future , once all these poor , knieve saps realise thev'e been sold a dummy there all be crying , and saying they didn't understand , of course the banks know what there doing there just simply taking the p**s out of anyone that bought one . I do feel sorry for many who took these rip off mortgages out as we were all clueless once , it's just that many never learn .

How sorry will you feel for them in 15 years, when they all sue for compensation and get away without paying off a chunk of capital (or all of it) on their house, when you have worked hard to pay your mortgage off.... and in the meantime they have had more money to spend [on Ipods]

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doh

I forgot Self-Certified morgages in my moan too..

So house prices booming because

Interest only morgages

BTL morgages

40 year morgages

7X + morgages

Self Certified morgages

Now i fully understand why i cant afford a house......Which one of these probably isnt going to be investigated in years to come???

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doh

I forgot Self-Certified morgages in my moan too..

So house prices booming because

Interest only morgages

BTL morgages

40 year morgages

7X + morgages

Self Certified morgages

Now i fully understand why i cant afford a house......Which one of these probably isnt going to be investigated in years to come???

And like I said, in 15 years, there will be no win, no fee cases against the mortgage cos by all these people, which will reduce the value of your assets (being shares in banks etc.....! :) ) to settle their claims and in the meantime, a goodly numberof them have spent the money they should have used to pay their mortgages off on X15s (as the BMW will then be called and holograph IPods!!).

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How sorry will you feel for them in 15 years, when they all sue for compensation and get away without paying off a chunk of capital (or all of it) on their house, when you have worked hard to pay your mortgage off.... and in the meantime they have had more money to spend [on Ipods]

Err Rachman , i would guess it will be in 2 or 3 years there be crying about it not 15 , also i'm sure it will defo be in the small print that if they default , the property will just go back to the bank , the banks would have learnt a lot from the endowment rip off and will make sure they are in the right this time and have everything on there side , and the knieve saps that took out there IO mortgages will be left without a home , but there still have there i-pods ;) , mmmmmm i-pod i must get one myself if only to keep up with everyone else .

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Err Rachman , i would guess it will be in 2 or 3 years there be crying about it not 15 , also i'm sure it will defo be in the small print that if they default , the property will just go back to the bank , the banks would have learnt a lot from the endowment rip off and will make sure they are in the right this time and have everything on there side , and the knieve saps that took out there IO mortgages will be left without a home , but there still have there i-pods ;) , mmmmmm i-pod i must get one myself if only to keep up with everyone else .

I did not mean the default, as it's interest only a lot of them can meet the interest portion - I mean when they realise that in a stagnant HP environment, they are not building any equity, they are simply paying out interest (like rent). About 15 years in is when the current 25 year olds will be hitting 40....... and then oh sh1t, we have not got a penny as we have been waiting for prices to rise - then bingo, enterprising lawyer and no win no fee class actions......

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I don't see how people will be able to make a mis-selling case on IO mortgages - after all the illustrations for these make it quite clear that you need to take an alternative investment out to pay off the principal. Presumably only illiterates will be able to claim compo!

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I don't see how people will be able to make a mis-selling case on IO mortgages - after all the illustrations for these make it quite clear that you need to take an alternative investment out to pay off the principal. Presumably only illiterates will be able to claim compo!

I don't know how most people claimed compo for being sold endowments either, but they did - they told me it would definitely make £30K plus I'd have a lump sum left over to spend...., I don't know, I just signed what they put in front of me.... I paid less in mortgage than I would have done on a repayment mortgage because they came up with a big growth rate in my endowment and I therefore have had more cash in my pocket and it suited me to believe them - I know that in 2000 it was obvious it was not going to make the required amount, but I did nothing about because it must be someone else's fault, not my avarice...

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I don't see how people will be able to make a mis-selling case on IO mortgages - after all the illustrations for these make it quite clear that you need to take an alternative investment out to pay off the principal. Presumably only illiterates will be able to claim compo!

it will certainly be very interesting to see how this pans out. As above posters have noted, the lenders have done rather a better job of covering their asses this time, having received some salutary lessons during the endowments affair. On the other hand, the financial and political crisis emerging from this will be much larger and more drastic. There will be real pressure for an effective debt amnesty to help get the country back on its feet again...

It's clear that the borrowers do not understand the risks inherent in the products they are taking out - the question is whether the lenders did their bit in properly communicating them. I expect that the bar will be retrospectively raised in terms of what was reasonably expected from lenders...

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It's clear that the borrowers do not understand the risks inherent in the products they are taking out - the question is whether the lenders did their bit in properly communicating them. I expect that the bar will be retrospectively raised in terms of what was reasonably expected from lenders...

Of course they understand the risk, they just don't care enough about it to want to reduce it :) - the annoying thing is that these people will try for compo when in the intervening years, they have spent the money they should have used to pay off capital and will be bleating about not having got their debt reduced....... - so cake and eat it time for them as usual - all they have to do is pretend they did not understand it - for a fat lump sum, I will act thick as well (won't be difficult...)

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  • 333 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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