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Multigeneration 50 year mortgage .... Again


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spygirl
Posted (edited)

Again. random from the idiots in the personal finance pages.

What happened to the 40y fix mortgage???

R4 ... breathless reporting .. 50y generation mortgage ...

Then went thru the papers --- Mirror .... Guardian .. FT.

There is no article on the FT. Ive looked.

Theres this in the FT personal finance bit -

UK mortgage rates rise at fastest pace in a decade

House price growth expected to slow as buyers’ incomes are hit by higher interest and jump in cost of living

https://www.ft.com/content/c41094b4-050d-4522-88ad-fc9a9829bd80

7edd6ac0-f92c-11ec-8cb1-cd9f924077da-sta

 

, heres the lefty papers -

Tories draw up plans for 50-YEAR mortgages that your kids would keep paying when you die

Boris Johnson has confirmed he is looking at controversial cross-generational mortgages - house loans that last so long, they are handed on to your heirs to keep paying back

https://www.mirror.co.uk/news/politics/tories-draw-up-plans-50-27377781

Children could be landed with their parents’ debt after they die under latest Tory plans to tackle the chronic housing crisis.

Families will be offered ultra-long mortgages that can be passed between generations under plans being drawn up by the Government.

Banks and building societies will be encouraged to let buyers borrow over terms of up to half a century or even longer so they can move into bigger homes.

They would not be expected to finish paying off their mortgages during their lifetimes, under the controversial proposal.

Instead, they would be able to hand over their properties to their children, including the outstanding debt.

Ministers believe the plan will give people the chance of moving into their dream home as they will be able to take out larger loans.

It comes after the Prime Minister last month vowed to turn “Generation Rent” into “Generation Buy” by launching an independent review of Britain's mortgage market with the aim of increasing the availability of 95% loans.

Offering deals with such low deposits was widely blamed for fuelling the 2007-08 financial crisis.

Mr Johnson said on Friday: “I do think there's a lot more scope to help people with 95% mortgages, there are quite a few products available now, which we've tried to encourage.

“But also, we want to find all sorts of creative ways to help people into ownership.

“Last year, actually, we had 400,000 first time buyers, that's a great number, we're starting to turn the tide, but it is crucial for this government and for our overall economic story if those numbers continue to be strong.

Boris Johnson vowed to “find all sorts of creative ways to help people into ownership” (

Image:

PA)

“We need young people to have the confidence, to have the deposits, the mortgage packages to be able to get into ownership.’

Asked if he was considering cross-generation mortgages that could be passed between parents and children, the PM replied: “Yes, certainly.”

That? They are basing the article on that????

And my f always popping up favourite -

Perenna, a new lender, has said it intends to roll out 50-year mortgages in the future.

https://www.mortgagesolutions.co.uk/better-business/2022/03/18/busting-long-term-fixed-rate-mortgage-myths-perenna/

If anyone has the number of mortgages Perenna has issued then I love to know.

Theyve been talking bollocks about these mortgages.

Its a crappy fintech that seems to spend its time getting datf article in the perosnal fiannce pages rather than making money

More lefty papres on the same thing -

https://www.theguardian.com/money/2022/jul/01/no-10-considers-50-year-mortgages-that-could-pass-down-generations

https://www.theguardian.com/money/2022/jul/01/fifty-year-home-loans-would-get-more-on-ladder-but-come-with-risks

By spreading the repayments over longer – the average for mortgages taken out this year is 29 years – buyers should be able to borrow up to eight times their income, rather than the current average of 3.2 times, say potential providers. The loans would be backed by borrowing from pension funds and insurance companies rather than against less stable consumer deposits, to satisfy the Bank of England’s prudential requirement.

Mortgage funding dont come from consumer deposits FFS. BoE is moving to get more n more mortgage debt off its books.

How does increasing term allow someone to borrow 8x more????

A long-term fixed-rate mortgage could allow a household with a £50,000 annual income to borrow £400,000 instead of about £150,000, and thereby unlock the bind many renters find themselves in where they cannot get a mortgage on the property they live in despite repayments being lower than the rent.

400k @ 5% for 50y is 1800/m

Fails MMR.

400k @ 5 % for 25y = 2300/m

Messing around the mortgage terms  does not make the mortgage cheaper.

Ditto you would nto get a bank signing up a a kid under 18 to support their parents mortgage.

By the time the kid is old enough to have some earnings to lend against, the parents will be too old to get mortgage.

This is daft lefty bbc mirror guardian, innumeracy, bad Tories, for properdee.

It is an attempt to solve a serious problem. Last year full-time employees in England could typically expect to spend about 9.1 times their workplace-based annual earnings on buying a home; an increase from 7.9 times earnings in 2020, according to the Office for National Statistics.

Eh?

Perenna, a new firm awaiting its licence, plans to offer the long-term loans. Its co-founder, Colin Bell, said: “Long-term fixed-rate loans really appeal to first-time buyers. One of the reasons they can’t get on the ladder is they don’t meet affordability tests that rightly have to take into account interest rate rises. They can get a mortgage, but it’s a small one.”

Still???? Theyve been waitign for their license for years.

https://www.finextra.com/newsarticle/37292/perenna-raises-10m-to-bring-fixed-for-life-mortgages-to-the-uk

18 January 2021

 

London-based fintech Perenna has raised $10 million to back its plans to obtain a banking licence and bring "fixed for life mortgages" to the UK housing market this summer.

 

Created 2013.

https://find-and-update.company-information.service.gov.uk/company/08479556

Still no license in 2022.

https://www.perenna.co.uk/about

https://www.perenna.co.uk/join-waitlist

Join the Waitlist

Be first to get a mortgage from us

 

 

 

 

Edited by spygirl
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Axeman123

Honestly, I see these potemkin schemes as a sign of fear and weakness. Compared to help to buy and funding for lending these latest trial balloons are thin gruel indeed.

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spygirl
Just now, Axeman123 said:

Honestly, I see these potemkin schemes as a sign of fear and weakness. Compared to help to buy and funding for lending these latest trial balloons are thin gruel indeed.

These are coming from -

- Piss pot finco trying to get traction.

- Lefty media trying to weaponise a throw away comment, whilst showing how bad their understanding of finance is.

- Filing in personal finance page with useless, trying to spin properdee BS.

All from a random throwaway response at a NATO meeting ffs.

You will get a mortgage, it will take less than 3% of household income, you will repay it before you retire, mortgage rates will return to 5%-9% soon.

 

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Seems more like desperation. Maybe it could work in Japan where conformity is higher. I doubt it here.

The obvious question is, what happens if you don't have kids, and if you do what happens if your kids refuse to be saddled with a debt they never agreed to?

It pisses me off how morally stupid and greedy people have become, that in order to keep house prices high an idea is floated to put the unborn into debt straight away.

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spygirl
34 minutes ago, Boon said:

Seems more like desperation. Maybe it could work in Japan where conformity is higher. I doubt it here.

The obvious question is, what happens if you don't have kids, and if you do what happens if your kids refuse to be saddled with a debt they never agreed to?

It pisses me off how morally stupid and greedy people have become, that in order to keep house prices high an idea is floated to put the unborn into debt straight away.

Again, simple maths.

You cannot sign up to any form of credit until you are 18.

Bnkas whatever will wait til you are at least 25/earning.

Mam n Dad pop kid out at 30-35. Kids is creditworthy at 25-30  .

Parents will be ~ 35 + 25 = 60.

Its just fuckwittery trying to find a way to make the numbers work.

FTB mortgages are took out by people 30-35, paid off before SRA.

30y is really the max you can do. And Under 4.5 household income, the majority of which will by median income x 1.5

 

 

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Wight Flight
13 hours ago, spygirl said:

Again, simple maths.

You cannot sign up to any form of credit until you are 18.

Bnkas whatever will wait til you are at least 25/earning.

Mam n Dad pop kid out at 30-35. Kids is creditworthy at 25-30  .

Parents will be ~ 35 + 25 = 60.

Its just fuckwittery trying to find a way to make the numbers work.

FTB mortgages are took out by people 30-35, paid off before SRA.

30y is really the max you can do. And Under 4.5 household income, the majority of which will by median income x 1.5

 

 

It's irrelevant. It is just a way to bring back interest only mortgages.

Everyone can afford the interest. Very few can afford the capital repayment.

Which is why renting exists.

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Axeman123
37 minutes ago, Wight Flight said:

It's irrelevant. It is just a way to bring back interest only mortgages.

Everyone can afford the interest. Very few can afford the capital repayment.

Which is why renting exists.

Surely though, without repayment along the way the children would just look at the outstanding vs market value and either roll the debt or walk away accordingly when the elderly relative either dies or goes into care. The lack of equity to steal (barring appreciation) would also leave a big gap in the government's social care budget. Who would even maintain a house on interest only with zero or negative equity, beyond your own convienience of living there. It just seems like a free punt on house prices, with no downside exposure, so long as the IO remians cheaper than renting a comparable property. Beneficiaries of an estate getting a mortgage to clear the original one and take over the house isn't even unheard of now.

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Wight Flight
6 minutes ago, Axeman123 said:

Surely though, without repayment along the way the children would just look at the outstanding vs market value and either roll the debt or walk away accordingly when the elderly relative either dies or goes into care. The lack of equity to steal (barring appreciation) would also leave a big gap in the government's social care budget. Who would even maintain a house on interest only with zero or negative equity, beyond your own convienience of living there. It just seems like a free punt on house prices, with no downside exposure, so long as the IO remians cheaper than renting a comparable property. Beneficiaries of an estate getting a mortgage to clear the original one and take over the house isn't even unheard of now.

You are assuming that house values won't continue to increase.

This kind of offer suggests they know they will.

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King Penda
Posted (edited)
14 hours ago, Boon said:

Seems more like desperation. Maybe it could work in Japan where conformity is higher. I doubt it here.

The obvious question is, what happens if you don't have kids, and if you do what happens if your kids refuse to be saddled with a debt they never agreed to?

It pisses me off how morally stupid and greedy people have become, that in order to keep house prices high an idea is floated to put the unborn into debt straight away.

What if the parents go into a home and own 300k of a 400k house .at say 1k a week in care costs they could be totaly fucked if a parent survives 5 years in care 

Edited by King Penda
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Axeman123
11 hours ago, Wight Flight said:

You are assuming that house values won't continue to increase.

This kind of offer suggests they know they will.

I disagree.

This kind of hollow headline IMO is more likely intended to stop an innevitable decline.

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King Penda
11 hours ago, Wight Flight said:

It's irrelevant. It is just a way to bring back interest only mortgages.

Everyone can afford the interest. Very few can afford the capital repayment.

Which is why renting exists.

My idiot friend in Telford is interest only and without his lodgers he has admited he is fucked it’s 220 a month on 83k and he is aready bleating to me.You can see his game plan a mile off but he could have cleared this years ago he works loads of overtime and gets over 900 a month tax free from lodgers it’s insane

B4A4D76B-6260-45CD-8351-25225AD577C6.jpeg

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Wight Flight
2 minutes ago, Axeman123 said:

I disagree.

This kind of hollow headline IMO is more likely intended to stop an innevitable decline.

If I got a £250k mortgage on 25 year terms, my capital repayment is £10k per year, and interest in year 1 is about £7.5k. £17.5k per year in total.

Double the timeframe and my capital cost drops to £5k. I can use that £5k to pay more interest, allowing the bank to lend me over £350k for the same monthly payment.

That will drive up prices.

 

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But then why stop at 50?

If you're going intergenerational you could justifiy 60 or 70 because 30-35 year deals also exist and if your kids are roped into it they could start paying at early 20s because they don't have to graft for years to save up the deposit that kids do today.

Personally I think it just won't work. You might as well try and import other stuff that works pretty well in other cultures because conformity and honour is more prevalent there. Would an unstaffed instant noodles store work here, no because too many people are cunts.

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King Penda
2 minutes ago, Boon said:

But then why stop at 50?

If you're going intergenerational you could justifiy 60 or 70 because 30-35 year deals also exist and if your kids are roped into it they could start paying at early 20s because they don't have to graft for years to save up the deposit that kids do today.

Personally I think it just won't work. You might as well try and import other stuff that works pretty well in other cultures because conformity and honour is more prevalent there. Would an unstaffed instant noodles store work here, no because too many people are cunts.

Wimin will be another danger to harmony who gets the house if someone divorces do grandparents and husband get thrown out or made to re morgage and buy wife out

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Axeman123
12 minutes ago, Wight Flight said:

If I got a £250k mortgage on 25 year terms, my capital repayment is £10k per year, and interest in year 1 is about £7.5k. £17.5k per year in total.

Double the timeframe and my capital cost drops to £5k. I can use that £5k to pay more interest, allowing the bank to lend me over £350k for the same monthly payment.

That will drive up prices.

 

I understand the maths. I understand the desire among the powerful to pack plebs into slums to ramp asset values. I just don't see any financial institution wanting to lend on these terms. There are so many unquantifiable risks:

Would you need the kids already to buy, if not would you need fertility tests? What would happen with regards to mortgage holders that divorce/remarry/blended families? What if the borrowers' only middle-aged child dies, meaning their is no longer a repayment plan in place for their later years, do they get evicted? What would be the ownership of property where a retired "owner" becomes estranged (or even gets a restraining order against) their adult child that is now actually paying the mortgage? Can the child hold withdrawing consent to have their name on the mortgage over the parents' heads? Could someone adopt a child just to qualify for a mortgage?

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King Penda
Posted (edited)

Sad to say this but this is where some Asian and black groups do and can beat us hands down they are more adapt at teamwork and a common goal .white people are more inclined to fuck each other over

Edited by King Penda
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Axeman123
Just now, King Penda said:

Sad to say this but this is where some Asian groups do and can beat us hands down they are more adapt at teamwork and a common goal .white people are more inclined to fuck each other over

They are normally the product of hard-times, especialy the oldest ones that set the tone in their communities/families. Westerners are normally the productof good times, especialy the younger adults that set the tone.

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King Penda
2 minutes ago, Axeman123 said:

They are normally the product of hard-times, especialy the oldest ones that set the tone in their communities/families. Westerners are normally the productof good times, especialy the younger adults that set the tone.

They are far better organised and trusting of each other I’ve got a Philippino friend and what they have done is unbelievable the familie is in ozz Canada nz and america.they go on holiday to each other they are all nurses money is sent home to mum and dad and the house is extended and upgraded its like something from the days of the masters house of a slave plantation.all from teamwork 

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Axeman123

A few further thoughts:

A lot of graduates with big loans and the prospect of earning a lot hence having to pay it off face the choice of: stay and get bled, or start over in another country and repay nothing.

A young person with in-demand skills would face a similar choice with one of these intergenerational mortgages hanging over their head, the monthly payments might be the same but being the first generation makes it "your house" but being the second makes you a glorified skivvy in your parents' house. The incentives to be the first generation are so much better than to be the second. Surely all the young talent would start a new life in a country with cheaper property, perhaps as digital nomads.

If you assume perpetual price increases the first generation payments would be far higher (due to higher purchse price today) than second generation ones (based on prices decades earlier). Ironically though that would mean no new ponzi entrants.

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Funn3r
5 hours ago, Boon said:

But then why stop at 50?

If you're going intergenerational you could justifiy 60 or 70 because 30-35 year deals also exist and if your kids are roped into it they could start paying at early 20s because they don't have to graft for years to save up the deposit that kids do today.

Personally I think it just won't work. You might as well try and import other stuff that works pretty well in other cultures because conformity and honour is more prevalent there. Would an unstaffed instant noodles store work here, no because too many people are cunts.

That noodle shop is brilliant. I would love to be able to get a snack any time 24hr. Not that it's too tricky to do at home if you have a kettle but the variety of add-on fresh stuff in that shop was great. Never thought of putting extras on noodles before; I am a bit literal-minded and just follow the destructions on the packet.

I don't understand how the shop works, in that they have induction heaters but the dishes are cardboard. The dishes have the same brand name as the machines "hauscook" so I suppose they do cardboard with metal inserts or something like that. The hauscook website says you can order machines internationally from Korea - I'm tempted.

I bought some eggs from the local farm the other day. It's also unstaffed, you write in the book what you have bought then push the money through a slot. They leave a dish of small coins out if you need change. I only got 6 large eggs £1.50 but people were going in and out with those square trays of 36. So at least cunts haven't managed to put them out of business yet.

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Wight Flight
5 hours ago, Axeman123 said:

I understand the maths. I understand the desire among the powerful to pack plebs into slums to ramp asset values. I just don't see any financial institution wanting to lend on these terms. There are so many unquantifiable risks:

Would you need the kids already to buy, if not would you need fertility tests? What would happen with regards to mortgage holders that divorce/remarry/blended families? What if the borrowers' only middle-aged child dies, meaning their is no longer a repayment plan in place for their later years, do they get evicted? What would be the ownership of property where a retired "owner" becomes estranged (or even gets a restraining order against) their adult child that is now actually paying the mortgage? Can the child hold withdrawing consent to have their name on the mortgage over the parents' heads? Could someone adopt a child just to qualify for a mortgage?

That's not the point. The bank doesn't care if you ever have kids. They will get there money back anyway, just like with interest only. This is just to make people think it isn't interest only and maintain a cloak of responsible lending.

 

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Axeman123
2 minutes ago, Wight Flight said:

That's not the point. The bank doesn't care if you ever have kids. They will get there money back anyway, just like with interest only. This is just to make people think it isn't interest only and maintain a cloak of responsible lending.

The issue then is what about retirement? A 25yr IO mortgage has the obvious shit or get off the pot trigger of the term ending, to force sale or remortgage etc. How resistant would the public be to seeing evictions of people at retirement that "paid every payment until now" and "have years left on the term" just because they asked to take a payment holiday? I know this is the bankers' dream of perpetual interest and never forming capital for the plebs, but it all seems to hang on ever advancing capital values. It seems circular to prop prices with a scheme that depends on them rising to begin with.

Who knows in this circus multiverse country though...

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