40 year fixed rate mortgage

[AtW]

I don't have one

(I pay my landlords' mortgage)

FTFY

[ladymuck]

FTFY

That is very true.

[jayn200]

What an absolutely horrible product. A 25 year at a normal rate will have a lower monthly repayment!!! Why would you choose to pay higher per month for 15 more years? Insane.

[TheGreenBastard]

What an absolutely horrible product. A 25 year at a normal rate will have a lower monthly repayment!!! Why would you choose to pay higher per month for 15 more years? Insane.

Exactly, people in the thread thinking this is a good product just shows how tulip the education system is in this country.

[DealorNoDeal]

It's a great product if BoE rates go up to 5% like in the normal times, but that ain't happening.

I wish. It must be well over 10 years since we got anything other than peanuts on our savings.

When they slashed rates after the 2008 financial crisis, they said it was a temporary measure.

Is there any point in having savings any more?

[ladymuck]

It's a great product for people on normal wages who can't get a 20-25 year loan because of the unnatural propping up of the housing market that keeps prices inflated and repayments unaffordable (by either practical or lender standards, which are often not the same thing).

I would expect any savvy borrower to use this type of loan to get started and then switch once they've built up equity. It would indeed be madness to keep the product for its 40 year life time.

[TheGreenBastard]

It's a great product for people on normal wages who can't get a 20-25 year loan because of the unnatural propping up of the housing market that keeps prices inflated and repayments unaffordable (by either practical or lender standards, which are often not the same thing).

I would expect any savvy borrower to use this type of loan to get started and then switch once they've built up equity. It would indeed be madness to keep the product for its 40 year life time.

What's unnatural about it? Things change, this is the new normal - this isn't UK specific.

Can you easily "switch" (get out of) this product? That's different than being "portable" (moving the mortgage to be used on a different property). I suspect there's extreme exit fees with this mortgage product (most fixed rates have punitive exit clauses).

I'm still at a loss why it's a great product, the 5.5% I have no issues with, it's a bridge if it has a short fixed term. Most high-street lenders will give better terms for 95% loans now with the gov's underwriting. It comes across as a Wonga loan for prospective first time buyers (go and do a simple calculation for this product).

[TheGreenBastard]

I stand corrected on the exit fees, apparently there aren't any, so it's essentially fixed-for-term-if-you-want - which could be a useful bridge indeed. Not sure I fully understand their business model.

[eek]

Not a bad option in some ways - higher interest but the option to fix for a long term with no penalties for early repayment is the sort of product missing from the UK market

https://www.theguardian.com/money/20...o-deposit-loan

EDIT: and it's portable too

Yep but it doesn't actually reduce the rate as you build up the equity in the house.

Which means that swapping mortgages every x years as you move down into the next loan to equity band makes far more sense than this deal does.

[ladymuck]

What's unnatural about it? Things change, this is the new normal - this isn't UK specific.

Can you easily "switch" (get out of) this product? That's different than being "portable" (moving the mortgage to be used on a different property). I suspect there's extreme exit fees with this mortgage product (most fixed rates have punitive exit clauses).

I'm still at a loss why it's a great product, the 5.5% I have no issues with, it's a bridge if it has a short fixed term. Most high-street lenders will give better terms for 95% loans now with the gov's underwriting. It comes across as a Wonga loan for prospective first time buyers (go and do a simple calculation for this product).

I looked at the website - and (as I said in the OP) you can make overpayments and repay early without penalty.

Most high street lenders will not give terms longer than 25 years which, for some people, puts the mortgage in the unaffordable category. I guess your attitude is that those people shouldn't have access to a longer term loan and be allowed to buy a home.