Times up, Zero interest mortgage.

[glenimp617]

I remember nearly 20 years ago when I bought my first ever house with the mrs. ISA mortgages were brand new and all the rage. You'd take out an interest only mortgage and have an ISA running alongside it.
The theory was, the ISA would make more money to pay off the house leaving you with a few thousands spare. In the first year of having it, the bank kept sending us letters saying the ISA wasn't doing well enough to pay it off. In the second year it was even worse. We changed deals to a standard repayment (no fees). Good job, as ISA mortgages only went on to do worse and worse. Look at it today, the interest rates are dirt cheap.

There is a site (see if I can find it) which is written by the same people who predicted the 2008 crash. They warn of a second, even bigger crash coming.

We are a society riddled with debt. People would rather spend £60 on a phone contract and 200 on a pcp car loan than put into overpaying mortgages or pensions. They will be the loudest ones to shout though and something will bail them out.

 

[RoboCod]

Half a million house! Sell it, buy one at quarter of a million!

 

[Boycey0211]

I remember nearly 20 years ago when I bought my first ever house with the mrs. ISA mortgages were brand new and all the rage. You'd take out an interest only mortgage and have an ISA running alongside it.
The theory was, the ISA would make more money to pay off the house leaving you with a few thousands spare. In the first year of having it, the bank kept sending us letters saying the ISA wasn't doing well enough to pay it off. In the second year it was even worse. We changed deals to a standard repayment (no fees). Good job, as ISA mortgages only went on to do worse and worse. Look at it today, the interest rates are dirt cheap.

There is a site (see if I can find it) which is written by the same people who predicted the 2008 crash. They warn of a second, even bigger crash coming.

We are a society riddled with debt. People would rather spend £60 on a phone contract and 200 on a pcp car loan than put into overpaying mortgages or pensions. They will be the loudest ones to shout though and something will bail them out.

200 for car payments is nothing, I know of young lads paying 4-500 on cars. One lad at work between him and his wife their monthly car payments at one point were £1500, no joke.

 

[glenimp617]

200 for car payments is nothing, I know of young lads paying 4-500 on cars. One lad at work between him and his wife their monthly car payments at one point were £1500, no joke.

It's worse than I thought then. That's just silly money.

 

[Alex_6n2]

So long as the majority of the 1.9M interest only mortgages are against properties with a decent % of equity, it shouldn't be too much of a catastrophe. Given the level of house price growth in the last ~20+ years, I would bet this is the case.

It could result in a glut of supply to the housing market, which may do interesting things to prices in the short term. But we're currently short on housing stock that is for sale so I'm not convinced it will be that bad.

Anyone moaning they "didn't understand" their mortgage only have themselves to blame in my opinion.

 

[platypus]

Yes. You still have to pay the £500k at the end of the term.

No I think @Minstadave was basically saying she's rented, but paid less rent, whilst having the privileges of home ownership as well.

 

[Street]

200 for car payments is nothing, I know of young lads paying 4-500 on cars. One lad at work between him and his wife their monthly car payments at one point were £1500, no joke.

I was saying this the other day, all the kids nowadays seem to have brand new A3s, BMWs etc, you don't see any driving round in old cars any more. I was happy with my £200 Corsa!

 

[Tefal]

I mean, what emergency requires £182,000?

A few days stay in hospital abroad if somone in the family didnt have medical insurnace?

 

[Tefal]

I think. a £1200 shortfall is a bit different... I mean so what? It is later on when people had £XX,XXX or sometimes even £XXX,XXX shortfalls that banks were quite keen to warn people in advance - see for example that Tom Crawford case, he was warned well in advance by the bank and advised to switch to a repayment mortgage, he didn't and through his own stupidity he lost his home.

But it's not a 1200 short fall its a £17.2k shortfall on ehat they where sold

 

[dalehitchy1]

200 for car payments is nothing, I know of young lads paying 4-500 on cars. One lad at work between him and his wife their monthly car payments at one point were £1500, no joke.

I have my car on finance at £140 a month and that was a big decision for me. I still feel uneasy being on it at the moment.

My mate recently got an Audi A6 on finance and he's spending £480 on it a month. It's a nice car... But it's funny because he lives with his mum on a council estate in what is considered to be a poor area. I wouldnt be comfortable with parking that on my street.

Anyway.. he's got a decentish wage ... Better than me... But he lives at home with his mum while I have a Mortgage and live with my partner.

In regards to the house prices... Like I said before... These people probably bought there houses for 50k 25 years ago. They were paying interest only which means monthly repayments were around £200 or less. That's much cheaper than renting. Add to the fact that some of these house have grown in value... let's say 250k+ ...... That means they can sell the house and gain £200k .... Or remortgage. It's not that bad.... And still a better situation than what most first time buyers are in

 

[dr_volki]

200 for car payments is nothing, I know of young lads paying 4-500 on cars. One lad at work between him and his wife their monthly car payments at one point were £1500, no joke.

wow, thought my car finance was bad because i put nothing down and paid £230/m
note: i used my saved cash for my car insurance which was just under £2k in the first year.

 

[dowie]

But it's not a 1200 short fall its a £17.2k shortfall on ehat they where sold

relative to the mortgage it is 1.2k, that is the 'shortfall' being discussed by both the other poster and myself - yes you can add on the supposed projection if you like but it isn't particularly relevant

 

[Tefal]

relative to the mortgage it is 1.2k, that is the 'shortfall' being discussed by both the other poster and myself - yes you can add on the supposed projection if you like but it isn't particularly relevant

It's incredibly relevant when looking at if a product is missold.

 

[dowie]

It's incredibly relevant when looking at if a product is missold.

so perhaps worth bringing up if that was the discussion in the posts, it wasn't though, the point was that a 1.2k shortfall wasn't something to worry about - on the other hand when people were headed for larger shortfalls later on then banks have tended to warn them in advance

fact is regulators got financial institutions to write to holders of endowment policies starting in the late 90s, people will have been getting warning letters in the years since then when their policies were heading for a shortfall

you're then focusing on an anecdote from a single poster who claims some figure that may or may not have been promised and that we have to accept his word that he wasn't written to - that may or may not be the case (I'd be slightly skeptical) but regardless the 1.2k shortfall isn't exactly the end of the world.

 

[MassiveJim]

I have said for a long time that basic home finances/economics should be taught in school.

Not everyone who leaves school will get good grades and work in a well paying job, because not everyone is clever enough.
There should be a basic economics class IMO.

I was about 27/28 before I "got" finances and am now on top of my debt, rather than having loans and credit card balances like I did at 19/20.
It took me until the age 29 to clear the debts that had accrued on the back of my initial £2000 limit CC I received when I was 19.

I see so many people in the position I was in with no understanding of finances etc
the "got to have it now" generation, phone/cars etc that have been mentioned above.

And as you can see they are the first to run to the press to see if they can get out of it.
The press are as much to blame though, why has this story been printed, 5 pages of posts on this forum and pretty much everyone saying the same thing.
Why didn't the journalist writing the article just tell the woman to jog on.

 

[StriderX]

Because she "deserves" her "ownership" of "her" London home.

Apparently the oldie generation can do no wrong and her debt should just be written off because he deserves that home... uhh Britishness etc. I think really though it was a fluffy story to describe a larger issue of ongoing stupidity among British people with respect towards money.

 

[robj20]

Will people get handouts to help with this or will it really be banks taking houses back? Pretty sure a relative has an interest only they boast how its really cheap at around £200 a month for 15 years.

Buying our first house was a huge decision in the end we opted to borrow at the lower end of what we were offered, we now even with a £250 a month car loan still have around 75% of our income as disposable.

 

[Jamesyboyjim]

Anyway.. he's got a decentish wage ... Better than me... But he lives at home with his mum while I have a Mortgage and live with my partner.

Yet I bet he'll moan about how lucky you are to have a house!

All of these idiots got themselves into trouble and are now trying to wiggle out of having to cough up. "oh we didn't know!!" what tripe!

If some kind of bail out happens this will only mean borrowing will become even harder for those who have a sensible long term plan.

We have too many financial idiots in this country who hit a wall and look around for someone to take responsibility.

 

[dowie]

Will people get handouts to help with this or will it really be banks taking houses back?

banks will repossess - why on earth should people get handouts for this?

 

[LeMson]

Will people get handouts to help with this or will it really be banks taking houses back?

The hand out would have to cover the cost of the mortgage, can't see some massive miss selling thing coming up and giving everyone "their" house?