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What happens went they want your Mortgage money?

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    What happens went they want your Mortgage money?

    Like all sophisticated, edgy, middle class people I carry an interest-only mortgage. The idea you strive through your life to own your own home but do not similarly attempt to buy the rail franchise for your commute to work has always struck me as so illogical but even worse, so last century. My mate John has loads of money but still keeps a £200k mortgage ticking over.

    However the fly in the ointment here is the bank will ring me up in a few years and say the term has finished: Can the have their money back?

    I've assumed that between now and then, given a) the vast number of people who've got mortgages they can't afford and b) the fact the Equity Release is often used to fund a mortgage (for offspring) and banks love mortgages, they will have piled heavily into lifetime mortgages. However I'm not seeing huge movements yet.

    Have any of you had these conversations with your banks? Do they give you more time or are they worried about lending-into-retirement?
    "Don't part with your illusions; when they are gone you may still exist, but you have ceased to live" Mark Twain

    #2
    House prices are going up fast. So who cares?

    Comment


      #3
      Originally posted by Cirrus View Post
      Like all sophisticated, edgy, middle class people I carry an interest-only mortgage. The idea you strive through your life to own your own home but do not similarly attempt to buy the rail franchise for your commute to work has always struck me as so illogical but even worse, so last century. My mate John has loads of money but still keeps a £200k mortgage ticking over.

      However the fly in the ointment here is the bank will ring me up in a few years and say the term has finished: Can the have their money back?

      I've assumed that between now and then, given a) the vast number of people who've got mortgages they can't afford and b) the fact the Equity Release is often used to fund a mortgage (for offspring) and banks love mortgages, they will have piled heavily into lifetime mortgages. However I'm not seeing huge movements yet.

      Have any of you had these conversations with your banks? Do they give you more time or are they worried about lending-into-retirement?

      Well that's the idea of a mortgage, you borrow the money and pay it back. If you have an interest only mortgage, at the end you'll have to pay it off, or sell up.

      So yes, I have interest only mortgages, and yes I have all of the money elsewhere. I plan to keep my interest only mortgage until the interest rates rise and it makes sense to pay it down.

      Seems fairly simple logic to me.
      What happens in General, stays in General.
      You know what they say about assumptions!

      Comment


        #4
        If you're not doing anything to save the cost of the capital and just paying the interest then there could be some very difficult conversations. I expect a lot of people will have to move to Bradford when they retire as that's all they'll be able to afford.

        Comment


          #5
          I am not so familiar with mortgages, but I am currently getting a modest one to help pay for a couple of building plots next to my house on an excellent rate of 1.64%

          Correct me if I am wrong, interest only mortgage, isn't that the one where you pay only the interest, but at the same time you invest a certain amount every month in the stock market or something ?

          If that's one, the little bit I know is that friends of my parents who were sold these 30 years ago, have recently found out that the investment does not cover the principle

          Call me old fashioned I'd go for the repayment approach

          You don't get anything for nothing in this life

          Milan.

          Comment


            #6
            Originally posted by Cirrus View Post
            Like all sophisticated, edgy, middle class people I carry an interest-only mortgage. The idea you strive through your life to own your own home but do not similarly attempt to buy the rail franchise for your commute to work has always struck me as so illogical but even worse, so last century. My mate John has loads of money but still keeps a £200k mortgage ticking over.

            However the fly in the ointment here is the bank will ring me up in a few years and say the term has finished: Can the have their money back?

            I've assumed that between now and then, given a) the vast number of people who've got mortgages they can't afford and b) the fact the Equity Release is often used to fund a mortgage (for offspring) and banks love mortgages, they will have piled heavily into lifetime mortgages. However I'm not seeing huge movements yet.

            Have any of you had these conversations with your banks? Do they give you more time or are they worried about lending-into-retirement?
            That's always been my worry. You're basically at the mercy of the bank's lending criteria at any given time you have to roll the debt on. My missus managed to get an interest only number linked to LIBOR prior to us meeting. They asked for a declaration as to how the sum would be paid about eight years into the term. You would have thought they should have asked before lending the cash, but then again it was 2007 when there was free money for everyone.

            Comment


              #7
              Originally posted by milanbenes View Post
              I am not so familiar with mortgages, but I am currently getting a modest one to help pay for a couple of building plots next to my house on an excellent rate of 1.64%

              Correct me if I am wrong, interest only mortgage, isn't that the one where you pay only the interest, but at the same time you invest a certain amount every month in the stock market or something ?.
              That's an endowment mortgage. An interest only mortgage is exactly what it says - nowadays only available if you've a good income and sizeable desposit. When the term is over you need to remortgage - if you can find a lender. If you can't find a new lender, then you'll have to pay the mortgage off some other way.

              (In CH, interest only mortgages are the norm, once you've reached a mortgage of 60% of the house value. I had four mortgages each of around 25% of the total loan, fixed for different terms. Now I have three because when the term expired, I just paid it off).
              Down with racism. Long live miscegenation!

              Comment


                #8
                I would imagine that anyone paying an interest-only mortgage knows EXACTLY how they are going to repay that actual mortgage at the end of the mortgage period.

                If they don't then they're idiots.

                (Say the smug git who paid her mortgage off in the first 3 years of contracting.)
                "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                - Voltaire/Benjamin Franklin/Anne Frank...

                Comment


                  #9
                  Long story short, if you can't refinance or sell the house to release the equity you owe, the bank takes the house, sells it at auction to cover their liability which will be much less than market value
                  Originally posted by Stevie Wonder Boy
                  I can't see any way to do it can you please advise?

                  I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

                  Comment


                    #10
                    I know a few people that took out interest only mortgages (100% too) back in the day.

                    They fall into two camps. One has pissed the other money up the wall and enjoyed himself, has no way of paying it off whatsoever, so will sell up and pay back the money on the mortgage and downsize (to a flat I suspect).

                    The others put their money into pensions, so the tax free lump sum will pay the mortgage off and they will carry on living there.

                    Since house prices have gone up 10000000000000000x it's a non event. They can always buy a house in spain for £50K if they have to and live off the EU handouts.

                    Comment

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