Grandad.Malky Posted February 12, 2012 Share Posted February 12, 2012 I guess they expect that the house might be worth more in 25 years. If that was supposed to be funny it just fell flat on its face …… Link to comment Share on other sites More sharing options...
Grandad.Malky Posted February 12, 2012 Share Posted February 12, 2012 Most mainstream mortgage providers, and why shouldn't they? It's not a higher risk for them than a repayment mortgage as over the life time of the mortgage it is almost certain that the value of the house will increase. I have just googled it and yes you are right since the requirement for a vehicle to repay the capital was dropped but my question is still valid …… who would lend the money or more importantly who would borrow if the didn’t know how they were going to pay it back. What happens at the end of the mortgage, does the bank force a sale to get their money back ………. It all seems very strange. Link to comment Share on other sites More sharing options...
anywebsite Posted February 12, 2012 Share Posted February 12, 2012 There always has been fraud, i really don't think that the boom was driven by fraud. If it was then you are accusing the majority of people who have bought a house in the last 10-15 years of being a crook, which patently isn't true. The boom was driven by cheap credit, lax lending conditions and a shortage of housing. Don't you think that the lax lending conditions were created by a massive fraud higher up in the banking system? The one where they'd bundle up a bunch of dodgy mortgages into a big 'secure risk-free' bond & then sell it on the markets? The boom & following crash has nothing to do with normal people, it was all driven by a massive fraud done by a few bankers in one or two very large financial institutions. Look at which financial institutions made massive profits from the crisis. Link to comment Share on other sites More sharing options...
anywebsite Posted February 12, 2012 Share Posted February 12, 2012 I have just googled it and yes you are right since the requirement for a vehicle to repay the capital was dropped but my question is still valid …… who would lend the money or more importantly who would borrow if the didn’t know how they were going to pay it back. What happens at the end of the mortgage, does the bank force a sale to get their money back ………. It all seems very strange. Yes, the bank can repossess the house & sell it, mortgages are secured on the property. If your endowment made less than the value of the mortgage that's what would've happened to you. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 Most mainstream mortgage providers, and why shouldn't they? It's not a higher risk for them than a repayment mortgage as over the life time of the mortgage it is almost certain that the value of the house will increase. I must be living in a parallel universe. When I took my first mortgage out many moons ago for I/O mortgage lenders used to demand evidence that you had a repayment vehicle in place. Lenders must have gone soft. I wonder why Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 I have just googled it and yes you are right since the requirement for a vehicle to repay the capital was dropped but my question is still valid …… who would lend the money or more importantly who would borrow if the didn’t know how they were going to pay it back. What happens at the end of the mortgage, does the bank force a sale to get their money back ………. It all seems very strange. At the end of the 25 years, if the borrower fails to extricate themselves before then or find the capital, it's like being kicked out of a rental agreement in the most disagreeable possible way Link to comment Share on other sites More sharing options...
JFKvsNixon Posted February 12, 2012 Share Posted February 12, 2012 At the end of the 25 years, if the borrower fails to extricate themselves before then or find the capital, it's like being kicked out of a rental agreement in the most disagreeable possible way It's not quite the same, as you'd sell the house for a lot more than your purchased it; pay the mortgage back and pocket the difference. It's not for me, I think that for most that do it it's meant as a short term measure. Link to comment Share on other sites More sharing options...
mj.scuba Posted February 12, 2012 Share Posted February 12, 2012 I don't think the interest only deals are meant to be long term, I got mine on a three year only deal, I don't think anywhere ever offered interest only over the full 25 years. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 It's not quite the same, as you'd sell the house for a lot more than your purchased it; pay the mortgage back and pocket the difference. It's not for me, I think that for most that do it it's meant as a short term measure. That only works when house prices are going up. But let's say you sell and pocket the difference where do you live then? Another mortgage for more money? Another self-cert? More risk? Do you see the problem? It's unsustainable and risky. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 I don't think the interest only deals are meant to be long term, I got mine on a three year only deal, I don't think anywhere ever offered interest only over the full 25 years. They used to, if you had something like an endowment in place to pay off the capital at term. In fact, in that case why wouldn't it be I/O for the entire term? Link to comment Share on other sites More sharing options...
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