Oh Dear - Never ending mortgages

[DimPrawn]

Wondered how families on lowish incomes can afford that bigger house even with prices rising?

http://www.dailymail.co.uk/pages/liv...n_page_id=1770

Millions of home-owners are being caught in a 'never-ending mortgage trap', a shocking study reveals today.

It warns that a new generation of home-owners face the ghastly prospect of still paying off a mortgage in their 60s and 70s.

The looming crisis has been caused by people changing their mortgage every few years - but never cutting the 'life' of their home loan.

A typical person takes out their first mortgage when they are about 30 and should pay off their 25-year home loan by the age of 55.

But many are taking out a new mortgage every few years, but always taking out another 25-year deal, rather than cutting it to 20, 18 or even fewer years.

Experts warn that it is an 'expensive mistake' which they will regret when they cannot afford to retire even though they are approaching their 65th birthday.

The research, published by the price comparison giant Moneysupermarket.com, said it is a foolish idea which is 'fundamentally flawed'.

Louise Cuming, the website's head of mortgages, said: "Extending the mortgage term is a short-sighted solution which has a long-lasting impact.

"Not only do consumers end up paying significantly more, but they could still be paying off their mortgage at the same time as collecting their pension."

Many home-owners take out another 25-year home loan when they remortgage because it cuts their monthly repayments.

Now you know. Doomed - Eventually.

[kramer]

Moneysupermarket is in north wales i think... the owner drives a ferrari and the pay is rubbish....

as for never ending mortgages.. some people are just dumb!

[wendigo100]

as for never ending mortgages.. some people are just dumb!

Indeed, but most people are never taught the realities of personal finance.

It is something that should be added to the school curriculum, but as dumb people who end up reliant on the state are Labour-voting fodder, don't hold your breath.

[NoddY]

The problem is that the passive dopes will be told what a magnificent opportunity it is to get them onto the housing 'ladder'. And they will be told they are 'lucky' - and they will believe it.

[ASB]

Surely they are not as badly off as the 25% of people taking an interest only mortgage - approximatley half of which have no repayment vehicle in place whatsoever.

[_V_]

Surely they are not as badly off as the 25% of people taking an interest only mortgage - approximatley half of which have no repayment vehicle in place whatsoever.

The National Lottery - Think Lucky.

[hyperD]

Surely they are not as badly off as the 25% of people taking an interest only mortgage - approximatley half of which have no repayment vehicle in place whatsoever.

It's not so much as whever house prices rise or fall but how quickly peoples' salaries will be eroded by the true cost of inflation in the UK that is conveniently being hidden from us.

Forget about increasing unemployment: most people don't have savings and will quickly go onto benefits to pay for their mortgages.

For those that are still working, it is the rising interest rates that will cripple people on interest only mortgages: the pinch point has come and gone for most people and it's only months away for IVA.

What is most worrying is that soon, as the escalation occurs, someone will turn around and say being in debt and losing their house is an infringement of their human rights and then the administration will turn to the taxpayer to pay for this mess.

[AtW]

Forget about increasing unemployment: most people don't have savings and will quickly go onto benefits to pay for their mortgages.

Surely benefits won't pay morgage interest?

[hyperD]

Indeed...

New rules came into effect on 2 October 1995 concerning help with mortgages for those on IS or Job Seekers Allowance and they depend on when you took out your mortgage:

If you took out your current mortgage BEFORE 2 October 1995 then, no help is given with housing costs for the first eight weeks followed by 50% of eligible interest for the next 18 weeks and 100% eligible interest thereafter. The Benefits Agency will pay interest at a standard rate, which may be higher, or lower, than the rate you actually have to pay.

If you took out your current mortgage on or AFTER 2 October 1995 then you will receive no assistance with your mortgage interest for the first 39 weeks of a claim; after that period the full amount of your eligible mortgage interest (again subject to the £100,000 loan limit) will be paid (at the standard rate). However, if you re-mortgage with the same lender after 2 October you will be treated as if your mortgage was already in existence before this date (see above paragraph).

Agreed, it looks grim for todays average house prices!