Mortgage question... go to interest only for a while?

I said risk, not certainty.

So what? Does that make the evidence wrong? No-one can predict exactly when asset price bubbles will burst. The best we can do is identify them when they are forming. Sounds like you're still fighting last year's battle.

You prefer to nitpick other posters rather than help the guy out with some impartial advice?

Reply to
Sammy
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"Sammy" wrote

If you weren't actually suggesting that prices are likely to fall over the next two years - just that the risk is that they do - then I am at a loss as to why you would even mention it.

The price risk has been "on the downside" for all of time.

"Sammy" wrote

What was "last year's battle" ?

"Sammy" wrote

You prefer to encourage your own particular "take" on the issue? At least I'm open-minded...

Reply to
Tim

Thank you, I'm glad it amuses you, but I wasn't being sarcastic. You said "who isn't" as though it were some kind of universal curse, that everyone has financial problems. That just isn't so.

Well, frankly I might as well be talking to a five year old if you don't see that what you're proposing is (at least prima facie) worthy of being tut-tutted. You've a whopping debt and are struggling to service it. That's serious. Serious enough even for you to recognise that you're having financial problems. Yet you want to bury your head in the sand and think they might be solved by waving a magic wand such as deferring loan repayment for a few years.

For God's sake, man, don't you realise that what in effect that means is that you're borrowing just to buy everyday stuff? It's bloody outrageous!

I see, you're selling up anyway, and are reluctant to move twice in a relatively short space of time. What's a couple? Nearer two or nearer 4-5? There really is an ever increasing risk of prices turning, and the longer you leave it, the higher the risk that you will lose your equity. Only you can be the judge of whether an extra move is too high a price to pay for alleviating the risk of losing a lot of money, possibly more than you have.

Jings. When I was on that salary, not so long ago, my mortgage balance was less than half that, and I thought it was a lot.

"I know I can't afford it but I'm keeping it anyway." -- Tsk.

No, but in your shoes, I wouldn't fancy the odds.

Yes, but we can do things to tweak the odds in our favour.

What's wrong with a flat? What's wrong with a cheaper area? You seem not to realise the gravity of your situation. "Things will get better all by themselves." -- Tsk.

Joke? So you think a 90% house price drop is funny? Yes, of course you do, because "it can't happen here". Now who's condescending?

Reply to
Ronald Raygun

OK, fair enough but your tone, although not intended to pretentious, actually sounds like it.

True, of course it isn't.

Oh, agreed, very serious. But bear in mind you don't know the whole of my circumstances, where I am, what I do, how old... etc. It all has a bearing but that wasn't what I asked originally. More on that later.

Tsk, now your jumping to conclusions? The idea to transfer will most certainly not be a cure all, or even a cure some. It will, however hold off the situation where I've less coming in than I need to pay out. That's all.

TELL ME ABOUT IT!

I'm on the South Coast and nearly 50 years old. To move away to a cheaper area means moving half way up the country, to be realistic. I have 23 years invested in my job here and can take early retirement in nearly 2 years time. THEN we're selling up and moving to a MUCH cheaper area and making a change in careers, but just how much of our personal life do you need to know?

This is a very bold statement. Seriously, what makes you think that? Do you work in an area of finance that has this sort of forecasts and actually predicts this? Have you or are you thinking of selling up and moving into rented to avoid this pitfall yourself?

Money. We need it to survive, but it's not the only thing that matters you know.

Where in the UK are / were you? Sussex is mega expensive...

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Look at some prices. £750 pcm will rent a 2 bed flat at the most. That saves less than a change to interest only, incurs selling costs, removals costs, disrupts my family, my sons school... And I'm GUARANTEED no equity at the end.

Bare bones is..

I need a roof above my head.

It's no cheaper renting for me.

How can I reduce my outgoings temporarily?

I don't either, but I really don't think prices are about to tumble... unless you KNOW differently. Otherwise you're just scaremongering whay MAY be.

Thats what I'm trying to do.

Again, see above.

So for us who have NO idea what you're on about, whats this Japanese link? Where do you get 90% drop from? Am I to guess that thats what has happened in Japanese housing? When, and what was the cause? Are there any similar trends happening here in the UK? Heh, lots of questions.

It's a strange world and anything can happen. Who would rationally say a country would get away with murdering millions of people in gas chambers, but it happened. BUT I have no reason to believe prices will drop 90% other than you crying "Wolf!".

I hope your wrong.

Reply to
Mike Barnard

Hi again.

To you all, what an interesting discussion. Thanks for showing interest (sic). One camp says "We're doomed!", the other says "Where's youre data?" To me, there's been no consunsus other than no-one really KNOWS whats going to happen.

So, what am I going to do? Haven't decided yet, but moving is not viable at the moment. I'll read on.

Reply to
Mike Barnard

Only sounds it to you I think.

Well five year olds do usually go round asking more and more people until they get the answer they want to hear.

Well tell us the circumstances you think are important in your first post otherwise everyone is just guessing at what's best.

I think you'll get a shock if you think moving half way up the country will be cheaper. What about renting somewhere smaller where you are, or ask the council if they have any properties for rent that no one else would take. If your money situation is so bad (and £500/month to live on after mortgage costs is bad with a family) then desperate times call for desperate measure.

Yes - sold up, new job and moved abroad.

No. You get the equity out of your house now if you sell and move to rented accomodation. You are gambling this against (and only against if you go to interest only loan) possible future rises. And you will still have the selling costs, etc in 2 years time. School isn't disrupted if you move to rented accomodation in the area.

Yep. Asks for advice and then not only ignores it but argues against it. If you are going to go interest only then just do it and don't bother replying to those who tell you it is a bad idea.

Ah but is that really true. Probably not if you try to rent the same size accomodation but see above.

Yes but you can guarentee now your financial situation rather than guessing which way things will go and if money is so tight I know which I would rather do.

Doesn't suit my lifestyle so I won't do it and hang the consequences.

See uk.finance in google groups ad naseum.

And we get a GODWIN at the end for good measure. Thread ends here...

Cheers

D.

Reply to
D

etc...

WHAT you say has merit, and I thank you (all) for that, but it's HOW you say it that puts my back up. You can't just say "Its not a good idea because of x y z", you have to talk down while doing it.

I could fill pages with my life story, but thats not going to help the original question get answered; "What I'm asking is if this is really as simple as it seems or are there hidden pitfalls that could catch us out in the long run?"

An answer of "Yes, there are pitfalls, you can lose lots of equity... etc" is polite and simple, rather than the pisstaking of "Tsk" and so on.

Outer Hebrides maybe? The detail of where will come in time.

This may be a three bedroom house but its a small one.

Tried the council ages ago, single mums only in effect.

But, you're all telling me interest only IS a desperate measure.

Nice. I'd miss my family mind. IYDMMA, what country and why that one particularly? Weather or finances?

Good point. And politely put.

Another.

True.

OH, so I'm supposed to doff my cap, say "Yes sir" then slink away? I'm not arguing against anything, just discussing, it's a part of a two way conversation. Once everyones had thier say then I'll discuss the options (including moving!) with my Wife and we'll decide what to do.

If you feel so badly then don't join in in the first place.

I *will* explore the actual costs, just to make sure I haven't missed an option. Until then I believe its no cheaper. I may be proved wrong.

Thats why I asked here, I don't want to guess. I was looking for informed people. I found possibly informed but sanctimonious people instead. Ho hum.

They're my consequences, I haven't decided what to do yet, and you are jumping to conclusions.

OK, I will. Thanks for at least a clue what its about.

Godwin? Another Google methinks, but I bet it's an insult, just to keep your writing standards low.

Bye.

Reply to
Mike Barnard

In message , Mike Barnard writes

My experience and opinions only - rely on them at your peril.

I discovered interest only mortgages in 1999, (before I built a property portfolio), and they initially helped me over a couple of short term cash flow problems, as well as with building the portfolio).

i now own several properties which i hope will provide my pension. All on interest only mortgages for the time being, or possibly forever?

If you are going to sell in 2 years, you will have forgone capital payments of £4800, (or so). This does not seem to be a big deal to me, but may to others.

Reply to
Richard Faulkner

This thread had been Godwin'ed, but since you resurrected it:

A rising market can cover up a lot of imprudence. When he does return to repaying the capital after 2 years on interest only (if he can't then sell as he plans), his monthly mortgage bill will go up to ~£950 (6% increase), and the total interest due over the life of the mortgage will go up by around £5K (5% increase). These numbers assume interest rates don't change (but they are likely to increase in the near future according to 70% of financial analysts) and that he switches back to repayments after 2 years - in reality, human nature being what it is, he may be tempted to continue on interest only unless he has more income.

He's borrowing from his future wealth rather than tackling the problem head-on now.

Oh, and property prices can go down as well as up.

Reply to
Sammy

In message , Sammy writes

What's Godwin'ed?

Agreed - and a couple of years with improved cashflow can stave off bankruptcy. Horses for courses.

Presumably you havent allowed for the possibility of extending the term by a couple of years? Not the end of the world in a 25 year deal - or is it?

Again, presumably 2 years worth of interest. Big deal, or not - depends on your view.

Like I said - rely on it at your peril. We are all big boys and girls, and we make our own beds.

I just read several posts which made the idea of interest only something that shouldnt be touched with a barge pole, and the mere thought of it means that you are in deep doo-doo.

The other side of the coin is that it can help tide you over a tough period, (however long that is), and/or the freed cashflow can fund other investments which may make a lot of money.

Welcome to the real world Dont we all do this, whatever, and however, we borrow?

Agreed

Reply to
Richard Faulkner

Only by you. Or are you a self imposed moderator too?

Reply to
Mike Barnard

Read this you stubborn s*d:

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Reply to
Sammy

Nothing wrong with stubborn, tho' I wouldn't think of myself as that.

If you mean "Sod", say it.

A great, info packed link. Thanks very much.

Reply to
Mike Barnard

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