People with Interest Only Mortgages

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Noxia said:
Think of a lot of it is the social stigma about living with your parents into adulthood. I live at home with mine with my girlfriend and we haven't rushed into buying yet as we are in an excellent position to keep on saving and have a relatively small mortgage for our first house.
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Congratulations, you are a clever man! Well done :)
 
People trying to blame others again - "they shouldn't have offered it to us", yet they would never have bought a house if they weren't offered one probably but it's very clear what "interest only" means. With all the PPI stuff, maybe some expect compensation for this as well.

Interest only makes sense still for those who will clearly have the capital at the end of the mortgage term to pay off the lone, or for buy to let.
I'm a bit peeeeveed that lenders have kind of done a blanket ban on interest only for private individuals - instead of just tightening up their rules on it and looking more closely at ones circumstances.
 
Teknobry said:
those people who are blaming everything on btl landlords -rule changes now mean they are taxed on the full amount of the rent they charge, not just the profit. couple that with the capital gains tax and there is little money in the btl game now.
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Those blamers are just whiners who don't want to get anywhere in life and want everything handed to them on a silver platter. The sooner they realise that "if you cant beat them, join them" the better off and more content they
will be. I have joined that camp this month with my first property investment.

Btw it is only a reduction from 40% to 20% of the mortgage interest claimable. Also one could do a dead of trust and give beneficial interest to a limited company that way they are only taxed at 20%.

You see, all you gotta do is learn the facts and play them to your situation. When will people learn and stop being whiners and player haters. Don't hate the player, hate the game.

Balls in your court people!
 
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scorza said:
If people can afford to rent then they can afford to live there. Only reason they can't afford to buy is that house prices have been driven up so much in part by BTLers and saving enough for a deposit takes so long because rents are sky-high.
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That's not really true. Most property in expensive areas make poor buy-to-let investments. The rental income doesn't give a good/any return after mortgage payments etc. The people who let and make money in these areas bought many years ago, or they are banking on capital appreciation only.
 
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DarrenM343 said:
People trying to blame others again - "they shouldn't have offered it to us", yet they would never have bought a house if they weren't offered one probably but it's very clear what "interest only" means. With all the PPI stuff, maybe some expect compensation for this as well.

Interest only makes sense still for those who will clearly have the capital at the end of the mortgage term to pay off the lone, or for buy to let.
I'm a bit peeeeveed that lenders have kind of done a blanket ban on interest only for private individuals - instead of just tightening up their rules on it and looking more closely at ones circumstances.
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This is the third time I've posted this but still some of you won't listen.
In 1983 we were told by the bank that after 20 years we would get back at least £14,000 which is what we borrowed. So we were mis-sold a mortgage and only knew we owed money 1 year from the end date.
At no point were we ever told that we may owe money.
 
Agree with the last two posters.
Prices not driven up purely by BTL'ers but simply due to people (both investors and private buyers) being willing to pay such high prices. If prices are too high then they will correct at some point. Same goes for rent really, people pay the prices so the prices paid are arguably fair.
 
Dimple said:
This is the third time I've posted this but still some of you won't listen.
In 1983 we were told by the bank that after 20 years we would get back at least £14,000 which is what we borrowed. So we were mis-sold a mortgage and only knew we owed money 1 year from the end date.
At no point were we ever told that we may owe money.
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But that's not PPI or being mis-sold an interest only mortgage? If it was an interest only mortgage then it's simple - you only ever pay the interest that is chargeable on the loan amount - never the loan. I'm assuming you talking about endowment type of mortgage? You must have had to have some kind of investment for them to say you would get something back? I do agree, some mortgage probably were genuinely mis-sold but usually based on the fact that they just never highlighted the risks clear enough (ie, if stocks don't rise by a low average then your investment may not pay off).

For years now, even before the crisis, interest only mortgages have been very clear. I took one out in 2004 knowing exactly what I was doing, even before applying for it.
 
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Dimple said:
This is the third time I've posted this but still some of you won't listen.
In 1983 we were told by the bank that after 20 years we would get back at least £14,000 which is what we borrowed. So we were mis-sold a mortgage and only knew we owed money 1 year from the end date.
At no point were we ever told that we may owe money.
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Most interest only mortgages left were probably taken out far more recently.

I don't think given the internet and proliferation of information people have excuses. I doubt a mortgage adviser could convince anyone now that they would get money back at the end of an interest only mortgage.
 
DampCat said:
Jesus.

Renters arent miserable? And they have done something. They've risked their capital in an investment. Feel free to do the same :l
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Buy to letters are the scum of the earth.

The sooner we treat houses as only a place to live rather than an investment oppurtunity the better imho. BTL just encourages weatlh concentration.
 
To my mind, there's nothing wrong with interest only mortgages, just don't be surprised that at some point they want the money back.
 
scorza said:
They get comparatively cheaper mortgages because they get 20% tax relief on mortgage interest payments - they used to get 40% until this year! As a home owner why don't I get that? Rent is charged at the market rates, not the cost of the mortgage - for the last few years rents have been going up and mortgages have been getting cheaper which means £££ for landlords.

The problem is that "selling on" is key to the business of BTL. Consider the following scenario:

1. Buy new build flat for £200k for minimum investment (10% @ £20k)
2. Interest-only mortgage of say £600pcm
3. Rent at market rates of £900pcm
4. Wait 10 years, that's £36k gross profit but then like you say you've got costs, tax to pay - so let's be pessimistic and say you've "only" made £25k. I agree that's not a massive profit over 10 years, but still a nice to have (>10% ROI).
5. Sell the flat for £300k - £180k for mortgageco and £120k for you - that's 60% ROI per year for doing basically sod all.

Granted there's risks e.g. voids, and who knows, maybe one day house prices really will crash and all the BTLers will lose out. I can't help feeling though that in that scenario the poor old tenant still loses their home when the mortgageco repossess the property.
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They get a relief because its a business. And they pay tax on profits and pay capitol gains tax when they sell. Its not all roses
 
amigafan2003 said:
Buy to letters are the scum of the earth.

The sooner we treat houses as only a place to live rather than an investment oppurtunity the better imho. BTL just encourages weatlh concentration.
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You realise that, under this plan, there will no longer be any places available to rent? Everyone would have to buy a house. Can't afford a deposit? Too bad so sad.

You don't need BTL investments to concentrate wealth - money always accumulates more money, it just does so via different investments.
 
Dimple said:
This is the third time I've posted this but still some of you won't listen.
In 1983 we were told by the bank that after 20 years we would get back at least £14,000 which is what we borrowed. So we were mis-sold a mortgage and only knew we owed money 1 year from the end date.
At no point were we ever told that we may owe money.
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but you're talking about an endowment shortfall, the OP is about people with no means at all to pay off the mortgage at the end...

bit of a difference between having to make up a couple of grand or so shortfall and having to pay off the entire capital
 
amigafan2003 said:
Buy to letters are the scum of the earth.

The sooner we treat houses as only a place to live rather than an investment oppurtunity the better imho. BTL just encourages weatlh concentration.
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also provides a much needed service - when I needed a place to live in London quickly to start a new job several years ago I needed the services of a BTL landlord. Plenty of other people rely on them too since paying rent for a room in a flatshare is much more economical when you're in your early 20s and already have some student debt to get rid of.
 
SlyReaper said:
It's a long-term, typically low interest loan specifically tailored towards the purchase of land and property.
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I think they were joking as they've probably paid off their mortgage - the ultimate place to be :) at least before too old.

I have a BTL and also have spent quite a bit of time renting, so provide a service to others while at the same time using the same service provided by someone else. BTL, or at least renting out ones own property to others is a necessity. In my case it enabled me to be more mobile and take work elsewhere in the country.
 
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dowie said:
also provides a much needed service - when I needed a place to live in London quickly to start a new job several years ago I needed the services of a BTL landlord. Plenty of other people rely on them too since paying rent for a room in a flatshare is much more economical when you're in your early 20s and already have some student debt to get rid of.
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I moved to London 17 years ago, before the BTL craze went mental - guess what, there were plenty of properties to rent back then. In fact, based on what I've seen today it was a hell of a lot easier to find somewhere to rent because people a few years ahead of me were able to buy their own properties (could kick myself for missing out on a 2-bed flat in Finchley for £90k) so there were fewer people competing for each property.
 
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