Thursday, Nov 09, 2006

Now here come the 60 year mortgages...

Daily Mail: Lender offers 'mad' mortgages that take 57 years to pay off

Abbey's at it again...

Britain's biggest mortage lenders are offering home loans which don't need to be paid off for almost 60 years. The "life-long mortgages" are aimed at first-time buyers who are struggling to get on the property ladder due to soaring house prices.

But experts warned last night that while they initially appeared attractive due to low monthly repayments, the borrower can end up paying more than 100,000 extra in interest. The deals are a far cry from the traditional 25-year mortgage and were last night labelled "madness"

Posted by little professor @ 11:02 AM (509 views)
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1. little professor said...

More from the article:

"Under a 25-year deal, a person who borrowed 150,000 at an interest rate of 6.75 per cent, the total interest bill would be just over 160,000. With a 57-year mortgage the interest bill would be an extra 280,000, which ironically is enough money to buy a second home.

At Abbey, you would have to be 18 to take out a 57-year mortgage because it must be repaid by your 75th birthday.

Sean Gardner, chief executive, said: "The old model of three times salary and a mortgage lasting 25 years is on the way out." After investigating 126 different deals, just one in four still have a maximum term of 25 years.

Life-long mortgages are aimed at first-time buyers who are struggling to get onto the property ladder because prices are so high. Young people face an affordability crisis, particularly in the South, because few can afford to take out a mortgage big enough to buy a home. If they do not have rich parents, who will give them a deposit, or do not earn a fortune themselves, few can afford it. Some are resorting to taking out "group mortgages" which let them buy with up to three other friends, family members or even strangers.

But many young people will be tempted to stick with their life-long mortgage because the monthly repayments are so much cheaper. There is a difference of about 175 a month between the monthly repayments on a 150,000 25-year mortgage, compared with a 57-year mortgage. "

Thursday, November 9, 2006 11:10AM Report Comment

2. Gav said...

Just another way of keeping the housing market buoyant and prices rising. Thing that annoys me as somebody that has yet to purchase a property is that there are plenty of dumb asses that are willing to take this kind of debt on.

Thursday, November 9, 2006 01:27PM Report Comment

3. inbreda said...

Even the Daily mail is disgusted at Abbeys latest deluded offer - that really does signify a change in the media attitude.

Thursday, November 9, 2006 01:37PM Report Comment

4. Cstanhope707 said...

Great News it shows despite all the VI spin that it's getting harder and harder for the Banks to find suckers sorry buyers so they are having to make these stupid offers.

Why not a when I win the lottery mortgage.

Thursday, November 9, 2006 01:46PM Report Comment

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