Viewing 30 posts - 41 through 70 (of 70 total)
  • Mortgages – who's on a repayment and who's on an interest only mortgage?
  • HansRey
    Full Member

    mudshark, thank you. That’s great

    trail_rat
    Free Member

    I know someone who is in their forties, both only children, both only one surviving parent and their repayment “vehicle” for latest house is to inherit. Sounds odd at first, but why be cash poor for 25 yrs in the prime of your life and inherit and become cash rich as you are about to return.

    Great plan ….. except knowing that my parents were both cash and time poor bringing me up – i told them to spend it all , leave me nothing have a good time just dont leave the surviving saddled with debt.

    The are currently motorcycling their way round europe(which oddly enough is dads psychiatric rehab prescription for his head on with a van in france last year)

    BoardinBob
    Full Member

    Just switching to repayment. Currently getting my ex-wife removed from the mortgage. Means my payments are about to go up by £500 a month 😯 but it’s manageable and part of my plan anyway

    hairylegs
    Free Member

    And IF you have a pretty numeric way of looking at things. An artist mate of mine is brilliant at what he does but away with the fairies when it comes to finance, does he listen to a mate ? A financial advisor who has his or her own interests at heart ? Its sometimes not as easy as saying that folk are just lazy

    Exactly that, and it’s all a matter of personal choice and what’s right for one person isn’t for another.

    Personally, mortgage free on residential property and interest only on a rental property investing the renatl income to provide a better return than if paying a repayment mortgage. When the mortgage term expires I have the flexibility to either:
    1. spend my investment to own the property outright,
    2. remortgage on another buy to let ineterst only, or
    3. sell and take the equity keeping my capital investment

    It’ll depend on a mix of things. My personal financial needs at the time, the financial climate etc

    Gary_M
    Free Member

    We’re interest only on our own home and on 1 property I rent out. Mortgage on our home is due for repayment in 3 years but we’ll be paying it off in a couple of months after the sale of another property goes through. We don’t plan on buying another house that we would need a mortgage on.

    The mortgage on the other property is peanuts and costs me £52.98 a month, rental income per month is more than 10 times that. That mortgage has 6 years to run but I’ll probably pay it off before then as I retire in 6 years so would prefer to be debt free by then, although being totally debt free at 50 is something to aim for so may pay off sooner.

    We had a plan and it worked out, don’t think I would do it now but my attitude to risk was different 20 years ago. And low interest rates have done us a real favour.

    Ferris-Beuller
    Free Member

    Bloody hell, what school of finance did they go to???

    He sounds mental!!! Twisting a Defender…..a massive sign! 🙂 all that money on something that is only going to lose money.

    Seriously though, NOW is the time to be over paying whilst interest rates are so low. I do hope they’re squirreling away thousands each year.

    its a dangerous game they’re playing. Not something id be comfortable doing unless i had thousands sat doing nothing.

    cozz
    Free Member

    defenders are not losing money at the moment

    mine is worth more than when I bought it in sept

    wilburt
    Free Member

    Yes interest rates are low but not as low as they should be.

    Did anyone catch the R4 programme this morning with lady saying if you want to stimulate the economy force the banks to BOE interest rates in their lending.

    There basically just skimming off 2-5% lending government money back to us.

    PeterPoddy
    Free Member

    Think the key either way is not over stretching yourself with the purchase price in the first place (yes easier said than done with today’s prices). We were offered a loan of nearly £400k

    This is it really. When I applied for our last mortgage I wanted £195k and was astonished to be offered over £300k. Lots of people would have taken the extra but we didn’t and when I was made redundant a few years later I was very glad we could afford a large pay drop for me and I could go work as a bike mechanic.
    That £195k about 8 years ago is now down to just over £70k and we’re overpaying as much as possible. Or mortgage payment is basically my pay packet every month.
    Also, when we moved we had 19 of 25 years left to pay but just added the extra on without extending the term. I recon we’ll have it done start to finish in about 19 years and we should be mortgage free sometime when I’m still 50.
    That’s all I care about, get it gone fast them drop to a 4 day week.

    piedidiformaggio
    Free Member

    What Drac is trying to say is that Stoner owns most of Worcestershire as well as a Château and vineyard in France and a Caribbean Island etc….

    That may well be true, but he no longer owns all of his fingers 😈

    Repayment here and currently on SVR, but seeing as we have less than £2k left to pay, no point doing anything else (came off a fixed deal a few months back). Very much looking forward to that day in a month or two when we are mortgage free 😀

    breatheeasy
    Free Member

    Got pals in a similar situation to the OP. Both of them, however, are single children of elderly (single) parents that own outright their decent houses. Their somewhat risky decision is basically when one of the parents croaks it then their IO mortgage is covered instantly.

    Suppose it makes sense – use their money whilst relatively young to enjoy themselves.

    thestabiliser
    Free Member

    That’s great but if the oldies cling on, have a serious chronic disease and have to self fund care through the sale of house/release of equity they’ll be Donald Ducked

    dooosuk
    Free Member

    That’s great but if the oldies cling on, have a serious chronic disease and have to self fund care through the sale of house/release of equity they’ll be Donald Ducked

    Not if you treat them to one last holiday in Switzerland first.

    fifeandy
    Free Member

    Repayment for me, currently fixed at 1.99% for another year.
    Hopefully paid off in 8-10yrs (mid 40’s) then either rent it out to pay mortgage on somewhere bigger, or use money previously assigned to repayments to aggressively grow the early retirement fund.

    TurnerGuy
    Free Member

    Still think an offset, if you can get a good rate, is the best idea.

    And I am surprised no-one else has said that as I have seen quite a few comments along the same lines on this forum.

    (As long as you don’t let the offset savings go above 75k)

    That way you have easy access to the savings if you need them, such as for a job loss, or for emergency repairs, etc, but they are still reducing the amount of interest you are paying, in the same way a less flexible repayment mortgage would have done.

    brassneck
    Full Member

    Repayment, fixed now. Have a family, a reasonable mortgage (with very high LTV) and no expectation of inheriting a pin so this is somewhere I won’t gamble on.

    Had a repayment years back but paid into a PEP as vehicle.. moved to the fixed but made a bigger dent from the PEP than I would have from repayment.. which could of course gone the other way easily.

    mike_p
    Free Member

    With the ease of access to ISAs that exists there’s no reason any home owner can’t be more efficient about their mortgage / investment arrangements. Its not a matter of wealth, it’s mainly financial literacy.

    Not everyone can afford investments or ISAs.[/quote]

    We’re not talking about everyone though are we, we’re talking about homeowners. If you can afford a mortgage then you can afford investments and ISAs, along the lines that Stoner has described. Anyone suggesting otherwise would be financially illiterate 😉

    tonyg2003
    Full Member

    The OP’s pals are probably being fairly financially risky and planning poorly however unless you have access to their bank accounts and full finances OP you might be judging them wrongly. Unlikely but possible. Also frankly – it’s their decision so why comment?

    wl
    Free Member

    I stayed interest-only for around 11 years – tiny payments allowed me to take a year off having fun aboard, go freelance and work part time ever since, and support my other half through a 2-year course to get the job she wanted. House nearly doubled in value and the equity enabled us to move this year to the house we really wanted. Now on a fixed repayment. Worked out well for us through a mix of luck and design, although we’ve now got a (manageable) 17-year mortgage to pay. Might not be as daft as it sounds, though we’re not extravagant materially, which might be your friends’ downfall.

    altgreen
    Free Member

    Interesting thread, I have been thinking about this myself.
    My old dad (God bless him) scrimped and saved and went without to pay off his mortgage, which he achieved. Sadly he died of a heart attack less than a year later (aged 52). My brother did the same, cancer aged 53. My brother in law, cancer, aged 56. My very good mate, brain hemorrhage aged 50. Can you see a pattern emerging?
    Should I live now, while I am alive, or pay off the mortgage to leave a bigger inheritance?

    wl
    Free Member

    altgreen – I used to refer to my mortgage as my ‘fun now, pay later’ mortgage when my mates took the piss. They’ll pay theirs off before me, for sure, but I have no regrets. I did some great stuff when I wanted to do it. Stuff I didn’t want to wait until my 50s or 60s to do, or miss altogether due to ill health or worse. Sounds like your family have it particularly rough though. Rotten luck, that.

    renton
    Free Member

    Can I just ask ….. What effect will the interest rate cut have when I come to re mortgage in November?

    Also where are people getting fixed rates at 1.99% etc!!

    altgreen
    Free Member

    Would people have the same opinion of someone who is renting? At least if you are on a interest only mortgage you have the option of downsizing when you retire. Assuming the equity will clear the loan.
    wl: I have reached the ripe old age of 56. I feel like I am on borrowed time to be honest!

    theotherjonv
    Full Member

    I guess I’m privileged. I bought when prices were low, and moved before they really shot up, as a consequence my mortgage is only about 45% of the house’s value. I also started paying into various savings vehicles as soon as I turned 18 (my Dad started the first one for me while I was at University) and all told they’ve raised sufficient now that about half of the capital is covered. So in the end I’m interest only on about 45% of the value of my house, and I still have to find about 25% of its value.

    That should come from the savings vehicles, but there’s also an inheritance that will come at some point. I’ve spoken many times to them to make sure they aren’t scrimping but they don’t want for ‘owt and want to make sure their kids and grandkids enjoy the luck they had over buying and investing at the right times, and i can’t tell them how to spend their money. There is a chance as with everyone that illness might change that – hence I’m trying to make sure I cover my debts independently anyway.

    Which puts me in a slightly odd situation. I live a fairly prudent lifestyle, I don’t struggle but i don’t ‘waste’ either. I could very easily cash out my savings and live a great life, with an inheritance safety net below me, and below that another net of sell the house and rent from salary plus positive equity. So my parents aren’t particularly enjoying their good fortune, and my best years are passing without me enjoying it either. Maybe my kids will……

    squealer
    Free Member

    I have an offset mortgage of circa £300k that is fully offset. I draw the money out periodically to buy cheap reposession houses that I can then sell on and make money from.

    Works well for me.

    oldmanmtb
    Free Member

    I agreed mortgage in 1999 that was 1% below base rate for life – let’s just say it’s done well since 2008

    wl
    Free Member

    altgreen – I’m sure you’re not on borrowed time really, and hope that’s that case. Still, if you feel like that, make the most of it by using that feeling to motivate you to do everything you want to do as soon as you can! I don’t want to sound morbid but plenty of research shows that most people’s biggest regrets at the end of their life include not having done more of the stuff they really wanted to. Working too hard and worrying about money too much are two of the other top 5 regrets.

    johndoh
    Free Member

    Oldman – so you actually *make* money from your mortgage? Isn’t there some small print????

    glasgowdan
    Free Member

    We’ve just bought a new house and signed a 5year offset at 2.28%, plan to overpay and clear it in 6-7 years. Our last mortgage was an offset too and paid off early. I think if you can plough plenty more cash into your mortgage it’s a great option.

    0303062650
    Free Member

    We bought 2yrs ago, fixed rate, not sure of the interest rate but it’s approx 5% which is pretty high I think. However, it’s a known sum going from the bank account every month; I’ve gone to uni (in my mid 30’s) and due to finish next May-ish and expect once I’ve got some reasonable cash coming in, we’ll work on saving and getting the (renovation job) house looking something like to then sell it on, allowing us to move to (hopefully) a larger house.

    I’d have to have a very well trusted financial adviser who has my/family interests at the core of any decisions – something which I think as likely as an honest criminal.

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