WasThatWise Posted February 12, 2012 Share Posted February 12, 2012 I'm sure if it was a problem the government or Europe or the banks would do something about it. Link to comment Share on other sites More sharing options...
Grandad.Malky Posted February 12, 2012 Share Posted February 12, 2012 If your endowment made less than the value of the mortgage that's what would've happened to you. No this thread is about a different thing altogether …. Interest only with no method of repayment that is quite different ..... if there is a short fall on an endowment it can be bridged with a loan. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 I'm sure if it was a problem the government or Europe or the banks would do something about it. Why would the banks themselves do anything about it? It is highly profitable. Link to comment Share on other sites More sharing options...
JFKvsNixon Posted February 12, 2012 Share Posted February 12, 2012 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. Maybe the plan was to put the money pocketed towards a deposit for a repayment mortgage, as others have said for many an interest only mortgage was cheaper than renting. Of course in a falling market all bets are off. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 No this thread is about a different thing altogether …. Interest only with no method of repayment that is quite different ..... if there is a short fall on an endowment it can be bridged with a loan. Or with sufficient warning of a shortfall endowment payments can be increased to cover it. Like you say a completely different thing altogether from the OP Link to comment Share on other sites More sharing options...
WasThatWise Posted February 12, 2012 Share Posted February 12, 2012 Why would the banks themselves do anything about it? It is highly profitable. Bless you for biting. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 Maybe the plan was to put the money pocketed towards a deposit for a repayment mortgage, as others have said for many an interest only mortgage was cheaper than renting. This defies logic unless the I/O mortgage was for 100% of the value of the property, you were certain house prices would always rise, you were happy to pay the indemnity fees, happy to pay higher interest payments, happy to be tied into the mortgage for years, happy to pay hefty redemption fees when you moved on. When faced with people willing to take these risks people who want to do it the right way (saving for deposits, not overstretching) are no doubt forced into making similarly crazy financial decisions just to get on the housing ladder. It never ceases to amaze me how normally rational people completely lose their marbles when it comes to buying houses. Link to comment Share on other sites More sharing options...
I1L2T3 Posted February 12, 2012 Share Posted February 12, 2012 Bless you for biting. You would be surprised how many people don't realise what has been happening. Self-cert mortgage warnings 2004. Banks complicit. Link to comment Share on other sites More sharing options...
chem1st Posted February 12, 2012 Author Share Posted February 12, 2012 Is paying interest-only on a mortgage simply like renting? Just wondering. Obviously without figures it can only be a generalisation It is similar, but there are differences. You would be liable for repairs etc. rather than the landlord. There is also the creation of money by the bank in the form of debt to usurp ownership of the property in the first place. Which in turn drives up inflation (the cost of living). Interest on the debt forms the slavery. Link to comment Share on other sites More sharing options...
mj.scuba Posted February 12, 2012 Share Posted February 12, 2012 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? They used to do that, I don't think they do it now. I know somebody who had an endowment style mortgage, at the end of the mortgage, the endowment policy left them with a six grand shortfall. Link to comment Share on other sites More sharing options...
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