Reply to: UK Property "Tipping Point"

[ace00]

Noone owns their house until it's fully paid off.

To be clear - you do own the house. You also own a debt secured against that house. You don't repay the debt, the house is removed from your posession.

[SallyAnne]

Please don't take this the wrong way, but you don't own the house.

Unlike those who repay the mortgage and thereby take ownership a slice of the house as they keep making repayments, you are only servicing the capital borrowed.

I'd always go for repayment method.

Noone owns their house until it's fully paid off.

Interest only was the most sensible option for us - we wanted the flexibility of paying off "sometimes loads" and "sometimes none" depending on whether we are in gigs or not.

And our high interest savings account is offset against the mortgage interest, so as we're building up our pot to pay the house off (should take another 4 or 5 years) we pay less and less interest each month.

In 5 years we'll be left with £280k cash in our savings account, and a monthly mortgage amount of 0. Then it'll be our choice to clear the balance or keep that money at our disposal.

[Bagpuss]

I remember getting a car loan in 1990 and the rate was around that. It seemed quite reasonable at the time, but that was when money wasn't cheap and easy and debt was considered a bad thing.

Lowering interest rates to 3.5% is all that is needed, the pound could then collapse, our imports go through the roof and we could all languish on the dole.
CyberTory

[Platypus]

Low interest rates will be the saviour of the current situation

Cobblers! Banks will simply increase margins. Rates to end customers will scarcely fall. iscussed on R4 this morning. Banks will claim that by keeping money harder to come by they are being responsible.

Anecdote: Barclays recently offered me the chance to cash my existing loan (rate: 7.9%) and get a new one (rate: 14.9%). Base rate was higher at the time the loan was taken than now.

[expat]

Of course you own the house. Your name is on the deeds and nobody else can claim to own your house, and the mortgagor(bank) has a charge on the property to safeguard its funding.
You will obviously not own your house if the bank forecloses due to your bad debt or other terms of the loan, because it would be sold, but that is a different issue.

OK, then the same applies to someone on an interest-only mortgage; in contradistinction to the OP's claim.

[Cyberman]

Nice one. Are you going to have a party when you get the whole living room? What about if the lending bank's boss needs somewhere to kip, will he chuck you out of the bedroom 'cause it's his ?

[ace00]

Unlike those who repay the mortgage and thereby take ownership a slice of the house as they keep making repayments,......

Nice one. Are you going to have a party when you get the whole living room? What about if the lending bank's boss needs somewhere to kip, will he chuck you out of the bedroom 'cause it's his ?

[rootsnall]

I thought you can still be chased for 12 years?

No, I don't think so but I'm not an expert.

If you have your house repossessed but don't go bankrupt then the banks can come back years later and chase you for it.

[Cyberman]

Please don't take this the wrong way, but you don't own the house.

Unlike those who repay the mortgage and thereby take ownership a slice of the house as they keep making repayments, you are only servicing the capital borrowed.

I'd always go for repayment method.

Of course you own the house. Your name is on the deeds and nobody else can claim to own your house, and the mortgagor(bank) has a charge on the property to safeguard its funding.
You will obviously not own your house if the bank forecloses due to your bad debt or other terms of the loan, because it would be sold, but that is a different issue.

[IR35 Avoider]

Please don't take this the wrong way, but you don't own the house.

Unlike those who repay the mortgage and thereby take ownership a slice of the house as they keep making repayments, you are only servicing the capital borrowed.

I'd always go for repayment method.

When you buy a house with a mortgage, you aquire an asset and a liability, the house and the mortgage. The value of the two is separate and a change in the value of the one does not affect the value of the other.

Your house burning down or falling off a cliff does not affect what you owe on the mortgage.

The amount you repay if you have a repayment mortgage affects the value (the balance) of the mortgage, it has no effect on the amount of house you own.

Some people think if they have a 200K house with a 100K mortgage that means they have 100K of house. They don't. They have 200K of house and -100K of cash.

[BrilloPad]

It does if you go bankrupt at the same time.

I thought you can still be chased for 12 years?

[expat]

Please don't take this the wrong way, but you don't own the house.

Unlike those who repay the mortgage and thereby take ownership of a slice of the house as they keep making repayments, you are only servicing the capital borrowed.

I'd always go for repayment method.

Is that true? Obviously it has a certain sense to it, but is it a legal fact?

But I too would always take repayment, because that's something I can understand.

[Cyberman]

If the market drops values another 40%, I'll start getting nervous

I'm not looking to sell, but if price drops 40% I'll be buying a second property to let.

[Moscow Mule]

Where I live, the Land Registry House Price Index shows an annual drop of 2% to the end of August.

Linky

Ta, quite good that link !

It'll catch up with the current Halifax/Nationwide figures in 6 months time, look when it started going negative on a monthly basis and work it out. I think the Halifax/Nationwide numbers still might need another month to lose the last positive figure !?

Is it too soon for volume figures for August 08?

Richmond's index has gone up since 08/07, but the volume isn't shown (I can't believe it's zero?)

Index 183.4 186.3

Average Price (£) 434,200 441,116

Sales Volume 531 -

[lambretta008]

We've got an interest only mortgage.

We bought at £280k, last time we checked it was worth £350k, but quite honestly, I couldn't give a t*ss if it's "worth" price dropped to £50k. It's my home, and I adore it.

I'd never walk away - it's worth every penny to me...infact I think it's under valued.

That's the difference between a home and a business venture I guess. This thread probably only applies to BTLs.

Please don't take this the wrong way, but you don't own the house.

Unlike those who repay the mortgage and thereby take ownership a slice of the house as they keep making repayments, you are only servicing the capital borrowed.

I'd always go for repayment method.