Times up, Zero interest mortgage.

[izzop]

I was taught from a very early age to never touch an Interest Only/Endowment mortgage.

If you can't afford a repayment mortgage what makes people think they can afford an interest only and also pay into a separate policy/endowment at the same time?

 

[Mr^B]

I was taught from a very early age to never touch an Interest Only/Endowment mortgage.

If you can't afford a repayment mortgage what makes people think they can afford an interest only and also pay into a separate policy/endowment at the same time?

The idea is that the investment you choose to make will perform better than the cost of the mortgage. So you would make lower payments than a normal mortgage, but still cover the cost of buying the house after 25 years.

It's not that people were stupid - on paper it looks great, it's just that a lot of endowment investments weren't invested very wisely. And there's a risk too, which was not often made clear enough at the time of purchase.

 

[Uther]

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

Yes, anyone who doesn't mind moving elsewhere will be laughing.Cheap rent and pocketing the equity.What a deal!

 

[antijoke]

Repossessed houses will only fall into the hands of BTL landlords.

 

[muon]

How did it do in the 5 yrs prior?

That's not my point. The 60% differs massively from simply looking at how the headline FTSE 100 index did over the last 5 years.

32% is what you get for the FTSE 100 over the last 5 years. Completely ignores dividends which makes it 60%.

Also even when the FTSE 100 looks like it is falling or still flat, you may be collecting a significant dividend yield.

So if anyone is going to go about comparing investments, they better do it properly instead of painting a completely misleading picture.

I find people that espouse the returns from gold tend to do this a lot.

 

[Destination]

Ah, quite.