Interest only mortage get out of jail card

[CaptainSlow]

Burgmeister said:

CaptainSlow said:

Until the FCA reverse the last three years of MMR introductions and lenders forget about the amount of losses incurred on IO loans.

Which losses are these?

The losses linked to having higher LTV%s on IO loans compared to CR loans which has been a bit of a problem in the last few years with properties in the parts of the country still below the 2007 HPI (which is quite prevalent outside the SE) and where the borrower defaults. In addition, the losses of running forbearance strategies in order to try and mitigate the above and/or haircuts if wishing to dispose of these loans.

Edited by CaptainSlow on Friday 31st October 13:01

[FreeLitres]

rossub said:

I wonder how many Japanese financial advisors said that in the early nineties......oops.

You cant predict the future based on what happened in the past. I'm overpaying the mortgage like mad (35% of take home on top of normal payment) for about 3 years while the rates are low. Cheap car, cheap holidays, very few un-necessary purchases. 40% of the mortgage will be gone and I'll then go back to having some good times again. 3 years is very little in the scheme of things to provide a nice chunk of security.

+1

I scrimped for 2 years to clear the final £70k. It's nice having an extra £600/month spending money.

[anonymous-user]

I have a bit of interest only mortgage left, but I can't see the point paying it off as only 1.09% interest (Boe+ 0.59%) which I had since 2008.
They keep writing to me to switch to a more suitable product ! I'm hoping they pay me an incentive to clear it as I guess they are losing money on the deal.
it makes more sense to give/lend the money to the kids as a deposit

[dvs_dave]

FreeLitres said:

+1

I scrimped for 2 years to clear the final £70k. It's nice having an extra £600/month spending money.

How does a 600 quid a month payment see off 70k over 2 years? Or were you paying off nigh on 3k a month for 2 years?

[Welshbeef]

The pros of owning a house outright might not be the best financial option - but it does give you utter financial security.


If say its more of a self actualisation than anything else - like getting the degree/professional qualification etc
Of course you could die the very next day but to live with that mindset isn't what I'd imagine the very very vast majority of people would. So even if you did for the following day then your partner kids family would have security so its nonsensical and selfish to think any other way. ( you could get high life insurance to mitigate that for sure but you simply never know).

[stolt]

interesting thread, we bought our house in 2007 for 418k and we have a mortgage of 187k. we were on fixed interest only for five years which ended a few months back so we are now on the standard varible rate which is alot lower than the fixed rate we had. So we are overpaying it at the moment at the rate the fixed was at, plus some extra each month just to clear it while the rate is low. I keep reading that mid next year the rate will go up so i we have no tie in to the standard rate so we will continue until they move again.

i wouldnt say it was planned in anyway but its the way its worked out, we have always sold at the height and bought in crashes so been really lucky in that way.

like to read other peoples opinions on what they are doing and the reasons why.

We have people at our firm that are still working at 73, as others have said its a scary thought when people in the media are dying at 67 and does make you question the decisions you make are the right ones, we are stil trying to do the house up aswell and have have three children i do question what were doing alot.

[Bullett]

Isn't there a potential double whammy here. IO mortgage not paid off by retirement plus a pittance of a pension?