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stumpy

I Must Be Getting Old

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Good evening all.

I would like to share my evening with you. My Daughter just rang me to tell me that she had found her new dream home. She recently married and both her and her Husband earn fairly good money in secure jobs. This will be their first purchase and is a two bed semi priced at £160k.

She has been to the Halifax and has been quoted a 40 year loan fixed for the first two years. The initial monthly payments will be £970 approx per month eek. I explained to her the market position at the moment simply by telling her that things were looking a little shakey, and possibly it would be better to rent a place for twelve months and see what things looked like then.

Of course she is all loved up with the property and wont hear of it. The house is in a good rural area near to their work and all services so not a bad place to be.

I am afraid the I come from the 9k house era with a 25 year mortgage of £69 a month so I am worried for them both.

Can anyone tell me if its normal for people to hock themselves up like this and if these long term loans are feasable. Is there a better way for them to go.

Now I am going to have the last Vodka.

Edited by stumpy

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It's normal, I'm afraid. Though frankly at 40 years you might as well go all-out for interest only, and put the measly difference in an ISA or something.

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Year

Total

Payments

Principal

Paid

Interest

Paid Ending

Principal

Balance

$160,000.00

1 $10,643.88 $662.65 $9,981.23 $159,337.35

2 $10,643.88 $705.27 $9,938.61 $158,632.08

3 $10,643.88 $750.65 $9,893.23 $157,881.43

4 $10,643.88 $798.94 $9,844.94 $157,082.49

5 $10,643.88 $850.29 $9,793.59 $156,232.20

6 $10,643.88 $905.00 $9,738.88 $155,327.20

7 $10,643.88 $963.20 $9,680.68 $154,364.00

8 $10,643.88 $1,025.15 $9,618.73 $153,338.85

9 $10,643.88 $1,091.12 $9,552.76 $152,247.73

10 $10,643.88 $1,161.29 $9,482.59 $151,086.44

11 $10,643.88 $1,235.98 $9,407.90 $149,850.46

12 $10,643.88 $1,315.48 $9,328.40 $148,534.98

13 $10,643.88 $1,400.10 $9,243.78 $147,134.88

14 $10,643.88 $1,490.16 $9,153.72 $145,644.72

15 $10,643.88 $1,585.99 $9,057.89 $144,058.73

16 $10,643.88 $1,688.01 $8,955.87 $142,370.72

17 $10,643.88 $1,796.59 $8,847.29 $140,574.13

18 $10,643.88 $1,912.14 $8,731.74 $138,661.99

19 $10,643.88 $2,035.13 $8,608.75 $136,626.86

20 $10,643.88 $2,166.05 $8,477.83 $134,460.81

21 $10,643.88 $2,305.38 $8,338.50 $132,155.43

22 $10,643.88 $2,453.66 $8,190.22 $129,701.77

23 $10,643.88 $2,611.48 $8,032.40 $127,090.29

24 $10,643.88 $2,779.46 $7,864.42 $124,310.83

25 $10,643.88 $2,958.24 $7,685.64 $121,352.59

26 $10,643.88 $3,148.53 $7,495.35 $118,204.06

27 $10,643.88 $3,351.03 $7,292.85 $114,853.03

28 $10,643.88 $3,566.58 $7,077.30 $111,286.45

29 $10,643.88 $3,795.98 $6,847.90 $107,490.47

30 $10,643.88 $4,040.15 $6,603.73 $103,450.32

31 $10,643.88 $4,300.03 $6,343.85 $99,150.29

32 $10,643.88 $4,576.60 $6,067.28 $94,573.69

33 $10,643.88 $4,871.00 $5,772.88 $89,702.69

34 $10,643.88 $5,184.27 $5,459.61 $84,518.42

35 $10,643.88 $5,517.77 $5,126.11 $79,000.65

36 $10,643.88 $5,872.66 $4,771.22 $73,127.99

37 $10,643.88 $6,250.41 $4,393.47 $66,877.58

38 $10,643.88 $6,652.44 $3,991.44 $60,225.14

39 $10,643.88 $7,080.35 $3,563.53 $53,144.79

40 $10,643.88 $7,535.77 $3,108.11 $45,609.02

41 $10,643.88 $8,020.47 $2,623.41 $37,588.55

42 $10,643.88 $8,536.38 $2,107.50 $29,052.17

43 $10,643.88 $9,085.45 $1,558.43 $19,966.72

44 $10,643.88 $9,669.83 $974.05 $10,296.89

45 $10,648.95 $10,296.89 $352.06 $0.00

http://www.bloomberg.com/invest/calculators/mortgage.html

Not a good plan. in the first 7 years they will have paid back 7,000 of the capital

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Can anyone tell me if its normal for people to hock themselves up like this and if these long term loans are feasable. Is there a better way for them to go.

If you don't mind me asking how old are they as 45 years requires them to 20 or younger if they wish to pay for the house before retirement? will their pensions be good enough to shell out £900 odd per month well into retirement?

The two year fix btw works out only 4% of total term. They'd need to refix 22 times before its repaid at that rate.

Edited by b0rk

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If you don't mind me asking how old are they as 45 years requires them to 20 or younger if they wish to pay for the house before retirement? will their pensions be good enough to shell out £900 odd per month well into retirement?

The two year fix btw works out only 4% of total term. They'd need to refix 22 times before its repaid at that rate.

Hi there,

They are 29 and 28 yeats old. The term is 40 years the vodka made a mistake.

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Hi there,

They are 29 and 28 yeats old. The term is 40 years the vodka made a mistake.

No worries :) even then its 4 and 3 years into normal retirement at 65 before they'd pay it back. Downsizing might be an option but getting competitive refixes will become harder as they age and retirement looms nearer. The lenders will once they turn 50ish want to know about payment affordability during retirement.

Edited by b0rk

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She has been to the Halifax and has been quoted a 40 year loan fixed for the first two years. The initial monthly payments will be £970 approx per month eek.

....it's just another way for the lenders to keep the bubble flying .....even now grasping floating straws before they drown......in defaults.....and HPC ......remember ...'89.... :unsure:

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No worries :) even then its 4 and 3 years into normal retirement at 65 before they'd pay it back. Downsizing might be an option but getting competitive refixes will become harder as they age and retirement looms nearer. The lenders will once they turn 50ish want to know about payment affordability during retirement.

You are missing something here.

The miracle economy is over, inflation will erode that debt.

If I lived that long, I reckon I could knock on their door in less than 20years time and £970 would be around a two days wages.

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No worries :) even then its 4 and 3 years into normal retirement at 65 before they'd pay it back. Downsizing might be an option but getting competitive refixes will become harder as they age and retirement looms nearer. The lenders will once they turn 50ish want to know about payment affordability during retirement.

Umm no, the Halifax were quite prepared to advance me a mortgage that would have run well into my retirement no questions asked. Almost conniving in fraud to make sure my income fitted to get it going (and this was a few years ago before things got really silly)

They don't care, its off their books, securitized, and a few p*ss ups in the city will be bought as a package by a hedge fund, who will use that as leverage 20 x over .... and hey ho off we go... if only I knew then, what I new now.

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No worries :) even then its 4 and 3 years into normal retirement at 65 before they'd pay it back. Downsizing might be an option but getting competitive refixes will become harder as they age and retirement looms nearer. The lenders will once they turn 50ish want to know about payment affordability during retirement.

... Born again Nulabour are working towards 75 ....normal retirement....... :(

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Good evening all.

I would like to share my evening with you. My Daughter just rang me to tell me that she had found her new dream home. She recently married and both her and her Husband earn fairly good money in secure jobs. This will be their first purchase and is a two bed semi priced at £160k.

She has been to the Halifax and has been quoted a 40 year loan fixed for the first two years. The initial monthly payments will be £970 approx per month eek. I explained to her the market position at the moment simply by telling her that things were looking a little shakey, and possibly it would be better to rent a place for twelve months and see what things looked like then.

Of course she is all loved up with the property and wont hear of it. The house is in a good rural area near to their work and all services so not a bad place to be.

I am afraid the I come from the 9k house era with a 25 year mortgage of £69 a month so I am worried for them both.

Can anyone tell me if its normal for people to hock themselves up like this and if these long term loans are feasable. Is there a better way for them to go.

Now I am going to have the last Vodka.

Frankly this is lunacy. I cant believe a bank would have the nerve to punt such rubbish. I also cant believe a couple with at least reasonable intelligence would entertain it. For a 2 bed semi as well? No wonder you are on the Vodka - i would be.

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Frankly this is lunacy. I cant believe a bank would have the nerve to punt such rubbish. I also cant believe a couple with at least reasonable intelligence would entertain it. For a 2 bed semi as well? No wonder you are on the Vodka - i would be.

..if they survive negative equity and climbing interest rates ......during the next 40 years there may be a chance of capital growth........but the certainty is no longer assured......... :o

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..if they survive negative equity and climbing interest rates ......during the next 40 years there may be a chance of capital growth........but the certainty is no longer assured......... :o

Who cares if prices crash or not - these people are thinking of a 40 year loan !!! FFS !!!! Go rent or go abroad or do something but dont be so stupid as to take on a 40 year loan in your late 20s.

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Who cares if prices crash or not - these people are thinking of a 40 year loan !!! FFS !!!! Go rent or go abroad or do something but dont be so stupid as to take on a 40 year loan in your late 20s.

...not so good in your late 50's...... :o

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You are missing something here.

The miracle economy is over, inflation will erode that debt.

If I lived that long, I reckon I could knock on their door in less than 20years time and £970 would be around a two days wages.

No it won't. Globalisation means wage inflation will grind to a halt whilst general inflation erodes quality of life for all but the mega rich.

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Who cares if prices crash or not - these people are thinking of a 40 year loan !!! FFS !!!! Go rent or go abroad or do something but dont be so stupid as to take on a 40 year loan in your late 20s.

I replied "..not so good in your late 50's"

You replied "Rather vague here old man, can you elaborate?"

Can I ask you......old chap......as a bull ....at what age you propose a mortgage is taken?....or is it the 40 years, which bothers you?.......it is difficult for me to think bullish in July 2007.... :o

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They don't care, its off their books, securitized, and a few p*ss ups in the city will be bought as a package by a hedge fund, who will use that as leverage 20 x over .... and hey ho off we go... if only I knew then, what I new now.

Yeah in the current market is it completely nuts, they will basically need it to remain nuts to be able to continually remortgage onto new fixed or discount rate deals, 20 twenty of them if they opt for 2 year deals each time. When reality returns and Halifax can't sell MBS's on to a bigger fool (or the bigger fool asks about quality) I'd expect Halifax and most others to start saying no *again*, trapped on SVR isn't a nice place to be. I'm guessing that the OP's kids where only going for such a looooooooong term mortgage because they couldn't afford a shorter one.

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In Éire over the last few years a 35 year mortgage had become nearly he norm for FTB's..... look what's happening there at the moment.

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Ignore anything about retirement age being 65. For most people they'll never retire. They'll have to keep working til they drop.

Doing what kind of work?

My current profession demands you go at 65. My former profession would likely not give you the time of day if you were over 50.

It's not an aging population that is so much a problem, but an agist one.

Will the red brick grads of 1990 be the MFI shop workers of 2030?

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