Wednesday, Nov 08, 2006

Sounds like a good deal, I'm in..

BBC News: 40 year mortgages 'becoming norm'

Nearly a third of UK lenders now allow borrowers to take out a mortgage lasting for 40 years or longer, research has revealed.

Posted by kpjcomp @ 05:39 PM (422 views)
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1. paul said...

And the BBC still manages to get it in:

"Most analysts are forecasting that interest rates will go up, increasing mortgage repayment costs for millions of UK homeowners."

Not even relevant to the topic.

Wednesday, November 8, 2006 06:31PM Report Comment

2. Nohpc said...

You have to work for 40 years so why not pay off your mortgage for 40 years. Long before that the mortgage will start to seem a lot smaller due to wage inflation

Wednesday, November 8, 2006 07:03PM Report Comment

3. Rimmer said...

The BBC should stop bleating, if IRs go up just increase the term of your mortgage, they are just reporting it

And who again gains from all this?

So 40 year 275K Mortgage at age 25 should be ready to start trading up around well let me see 50 something!

Wednesday, November 8, 2006 08:17PM Report Comment

4. sirgoogle said...

Hey. I've still got my 40 year endowment from 1988. Apparently it won't pay up the amount it should. The banks are kidding you if you think this is a good idea - its not.

Don't do it. You will be retired before you have finished paying it and worse - you may be on a pension and still paying a mortgage.

Wednesday, November 8, 2006 09:30PM Report Comment

5. harold said...

longer mortgage term = more interest payed to banks

non-starter in my book

Wednesday, November 8, 2006 09:35PM Report Comment

6. sirgoogle said...


Fully agree. I was a young FTB, newly married, no way of renting (rents were too high) or getting a council house (I had a job and Maggie was selling them off) - so I took the plunge at the peak of the market. Ergo 11years negative equity.

Got rid of the house eventually but still got that endowment. I am going to keep it like a souvenir. I expect that inflation will have so eaten its value, that by the time it pays out that I might be able to have a nice meal out on it.

Wednesday, November 8, 2006 09:41PM Report Comment

7. harold said...

Endowments for many people were a travesty. When my wife and I bought our first house we took 'advice' from an independent financial advisor who was keen - not surprisingly - to sell us an endowment mortgage. After finding out that his commission was front-loaded ('loaded' being the operative word) we opted - much to his chagrin - for an interest only mortgage with NO penalties for early repayment of the capital lump sum. It was a great mortgage (C&G), no frills, and no bells and whistles, just a straightforward loan with the stipulation that the money was to be repaid within 25 years. We actually used the mortgage as a savings account. That is, any spare cash we had, we just paid off the mortgage, thereby reducing out monthly repayments. Essentially, this is tax-free saving, because rather than building up savings that the government, for some inexplicable reason, feels at liberty to steal, you are reducing your borrowing. It was so simple. Get this though - at the time the C&G were the ONLY lenders to offer this type of mortgage, and we had to press them for it quite hard.

P.S. Because there were no penalties for early repayment of the capital, when we sold our house we just gave the C&G what capital we owed them and pocketed the difference.

Wednesday, November 8, 2006 11:32PM Report Comment

8. Nohpc said...

Harold. I have a similar mortgage. It is great to be able to put all your savings into your mortgage knowing you can get it back if you need it and at the same time the government can't get it's grubby hands on your money. The best thing is if you take into account the fact it is tax free inflation can barely touch it. If you are making positive equity it makes it all the better. Negative equity is okay if you can ride it out and keep on piling money into it.

Thursday, November 9, 2006 02:28AM Report Comment

9. harold said...

People may ask: what's the difference between this and a capital repayment mortgage. The answer is that with a capital repayment mortgage it is only towards the end of the term (usually 25 years) that you start paying off the capital. In the early stages of the mortgage all you pay off is the interest. That's why with a typical capital repayment mortgage there are early redemption penalties built in to discourage people from paying back the capital early. Head they win, tails you loose.

Thursday, November 9, 2006 10:32AM Report Comment

10. Cstanhope707 said...

Well this is good economics the average first time buyer is now 35 so that means that they will pay off the loan at 75. Of course this will be no problems it is easy to get a good job whgen you are older and our pensions in the UK are fantastic. NoHPC you fail to point out that unless you are a civil servant with a job for life and great pension then in the private sector you occassionally have to battle with redundancy , blatant age discrimination and a crap pension...... So no this is not a good idea.......

Thursday, November 9, 2006 01:58PM Report Comment

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