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gruffydd

20% Of Ftbs Take Interest Only Mortgages!

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Some of these might have a vehicle to repay though.

If they've already got ISAs or some other thing, it's possible.

They might have just ticked "not specified" on the form so to speak, but had a plan in place

Edited by ScaredEitherWay

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Some of these might have a vehicle to repay though.

If they've already got ISAs or some other thing, it's possible.

They might have just ticked "not specified" on the form so to speak, but had a plan in place

Ha ha ha ha, yeah I bet they do... not!

More likely they have a vehicle to pay off on credit as well!

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1 in 5 is about right IMHO, that's probably not that different from what's out there in 'mortgage land' as a total TBH. Interesting stat I came across is that the bigger the mortgage the more chance it's IO. So the jumbo mortgages in the UK of 500K+ are far more likely to be IO.

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1 in 5 is about right IMHO, that's probably not that different from what's out there in 'mortgage land' as a total TBH. Interesting stat I came across is that the bigger the mortgage the more chance it's IO. So the jumbo mortgages in the UK of 500K+ are far more likely to be IO.

But the difference is the people out there in mortgage land who borrowed I/O 5 years or more ago, probably have endowments and other things in place to pay it back. Whereas the people borrowing I/O now are simply maxed out, it's the only way to do it and haven't factored in rising interest rates.

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1 in 5 is about right IMHO, that's probably not that different from what's out there in 'mortgage land' as a total TBH. Interesting stat I came across is that the bigger the mortgage the more chance it's IO. So the jumbo mortgages in the UK of 500K+ are far more likely to be IO.

What is the fundamental objection to IO mortgages? Given that half this site keep saying how great it is to rent a house, and the rest keep saying that a repayment mortgage is renting from a bank, whats the problem? So the borrower doesnt own it at the end of the mortgage? Whats so wrong with that? I just dont get this primal aversion to people that take on IO mortgages.

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What is the fundamental objection to IO mortgages? Given that half this site keep saying how great it is to rent a house, and the rest keep saying that a repayment mortgage is renting from a bank, whats the problem? So the borrower doesnt own it at the end of the mortgage? Whats so wrong with that? I just dont get this primal aversion to people that take on IO mortgages.

It's difficult to say I/O very quickly, hence we don't like them.

Well that and their rise is usually the harbringer of doom, throwing their victims in to exacerbated negative equity.

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What is the fundamental objection to IO mortgages? Given that half this site keep saying how great it is to rent a house, and the rest keep saying that a repayment mortgage is renting from a bank, whats the problem? So the borrower doesnt own it at the end of the mortgage? Whats so wrong with that? I just dont get this primal aversion to people that take on IO mortgages.

I think it's because people here see it as a way of being able to buy a place and stretching yourself to do so because you can't afford repayment.

I'd get an interest only mortgage if inflation was running high. If I'd bought a house 25 years ago IO, without a repayment scheme, I'd now have to give them £60,000.

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Negative equity combined with forced sale.

How the ****** does having an IO mortgage make you more likely to have a forced sale? As for negative equity, if we get the crash you jokers keep saying we will, then a repayment or IO doesnt make a difference does it?

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I think it's because people here see it as a way of being able to buy a place and stretching yourself to do so because you can't afford repayment.

I'd get an interest only mortgage if inflation was running high. If I'd bought a house 25 years ago IO, without a repayment scheme, I'd now have to give them £60,000.

More like 10-15K than 60

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I think it's because people here see it as a way of being able to buy a place and stretching yourself to do so because you can't afford repayment.

I'd get an interest only mortgage if inflation was running high. If I'd bought a house 25 years ago IO, without a repayment scheme, I'd now have to give them £60,000.

Still dont see what the overall objection is.

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How the ****** does having an IO mortgage make you more likely to have a forced sale? As for negative equity, if we get the crash you jokers keep saying we will, then a repayment or IO doesnt make a difference does it?

Think about it!!!

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What is the fundamental objection to IO mortgages? Given that half this site keep saying how great it is to rent a house, and the rest keep saying that a repayment mortgage is renting from a bank, whats the problem? So the borrower doesnt own it at the end of the mortgage? Whats so wrong with that? I just dont get this primal aversion to people that take on IO mortgages.

Over the long term IO costs much more than a repayment mortgage.

It is also so easy to let the years go by paying IO, and when you can lest afford it later on in your life you might find you have a large sum of money that you are required to repay before you can retire. Inflation or even HPI is not as it was.

IO for BTL all well and good, but for your main home it would be wise to review regulary.

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Think about it!!!

I have thought about it. With an IO mortgage your monthly outgoings are less than a repayment loan. Are you being unnecessarily cryptic or is there just no point to me asking the question?

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I have thought about it. With an IO mortgage your monthly outgoings are less than a repayment loan. Are you being unnecessarily cryptic or is there just no point to me asking the question?

Actually I have to pull you up seriously on this one....

What you mean is _initially_ your monthly payments are less. In the long term they are much much higher as you aren't paying down your debt.

Hence why we don't like em, and they banks love em, can I get away with comparing I/O loans being like Monsanto's genetically modified seeds for african farmers. You know the ones modified so they don't yield viable seeds for planting next year. Cheaper at the outset but still not good for the farmer in the long run.

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I have thought about it. With an IO mortgage your monthly outgoings are less than a repayment loan. Are you being unnecessarily cryptic or is there just no point to me asking the question?

Most (not all) are likely to be taking I/O because they cannot afford the house they want with a repayment mortgage.

Limiting factor in this would be their salaries.

So, if rates rise, they will be more stretched than someone who has the same percentage mortgage/per salary outgoings that is repayment.

Edit: Add onto that what Brownfield said above this post!

Edited by OzzMosiz

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Actually I have to pull you up seriously on this one....

What you mean is _initially_ your monthly payments are less. In the long term they are much much higher as you aren't paying down your debt.

Hence why we don't like em, and they banks love em, can I get away with comparing I/O loans being like Monsanto's genetically modified seeds for african farmers. You know the ones modified so they don't yield viable seeds for planting next year. Cheaper at the outset but still not good for the farmer in the long run.

Your payments on an IO mortgage are always going to be less than on a repayment loan. The difference is that as a repayment loan progresses, the proportion of the payment that is allocated to capital repayment is more - but that does not make the pounds and pence payment per month any less.

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Your payments on an IO mortgage are always going to be less than on a repayment loan. The difference is that as a repayment loan progresses, the proportion of the payment that is allocated to capital repayment is more - but that does not make the pounds and pence payment per month any less.

You can re-mortgage at year 20 (for example) on a repayment and your repayments would be considerably lower than I/O on the same initial amount!

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Your payments on an IO mortgage are always going to be less than on a repayment loan. The difference is that as a repayment loan progresses, the proportion of the payment that is allocated to capital repayment is more - but that does not make the pounds and pence payment per month any less.

1+1=....???...hmmm...nah, too difficult that...

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I used to not see the point of I/O mortages but I'm considering changing to I/O next year at the end of my fixed term. Rates aside, when it all unravels, I'd rather I was hanging on to the equivalent amount of capital repayments I would have made instead of being chased by the bank and then being left with nothing and facing repossession.

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You can re-mortgage at year 20 (for example) on a repayment and your repayments would be considerably lower than I/O on the same initial amount!

Only if you extend the life of the loan. You can do this with an IO loan. Hardly comparing apples and apples is it?

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Only if you extend the life of the loan. You can do this with an IO loan. Hardly comparing apples and apples is it?

I've agreed with you till now, changing the term on an I/O mortgage doesn't change the monthly payment.

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Your payments on an IO mortgage are always going to be less than on a repayment loan. The difference is that as a repayment loan progresses, the proportion of the payment that is allocated to capital repayment is more - but that does not make the pounds and pence payment per month any less.

Unless interest rates go up...

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