An Infinity Mortgage ?
Here in Spain the concept of a mortgage period of 20 or 25 years is something new. The general feeling by the banks is that want their money back more quickly than banks in countries in which they are accustomed to longer periods. The borrowers are also accustomed to the idea that the guiding principle is to pay off the mortgage as quickly as possible.
First Timers The problem for all those people starting out on the property ladder is the amount of money that has to go out each month to put the roof over one’s head. At least this is true for the early years, but not necessarily as the4 years go by, since the advent of inflation. Cases that we studied showed e.g a couple, whose monthly income was £400, having to pay £150 per month in mortgage payment. Although the interest fluctuations since then have meant varying payments, as a percentage of their current monthly income of £2,000 per month, the mortgage does not now seem so horrendous. Varying interest rates The mistake made by many lenders in boom times is to conveniently forget the possible variation in interest rates during the early years. While a doubling of the payment in the case mentioned above would not be a disaster now, had it occurred during the early years it could have lead to foreclosure, and them losing their dream home. In our study we found various examples of interest rates going from 3% to 16% in very short periods of time. Maybe the lenders should have insisted on doing the relevant calculations, assuming a high rate, to check if the borrowers could afford the payment during the first few years in the event of this occurring. Asking the potential borrower would not necessarily have produced a sensible result, as many that we spoke to said, “It’s OK, we’ll manage somehow.” Unfortunately, for thousands of borrowers, this turned out not to be the case. One case showed an initial payment of £269 per month, on an income of £800 per month, which ballooned to £690 per month on an income of £900 per month, with devastating consequences. How long a repayment period ? Many years ago, a borrower, my father, tried to convince lenders of the idea of a much longer repayment period. In fact so long that he gave the idea the name, infinity mortgage. The idea was to pay the interest, at whatever the actual rate would be, but not to repay the capital. Naturally in the staid world of banking this fell on deaf ears, and several so called bankers laughed at the idea. Eventually he was able to persuade an institution to go ahead with his proposal, and he purchased a house. He is now nearing retirement and still has not paid off the mortgage, and continues to pay the interest. He is happy with the idea that, when we inherit the house, we will have to pay off the capital, and so are we. The current position ? The house is now valued at £280,000. My father’s income is £5,300 per month. And the mortgage payment ? The last time we spoke of the matter it was the mighty sum of £7.92 per month. The capital to be repaid ? The not insignificant amount of £1,900. Whether your local currency is pounds sterling, euros or dollars, the principle is still the same. While the motivation at the time, as a penniless masters student, was to keep every payment down to a minimum, the capital repayment would not exactly have broken the bank once a few years had gone by. When he reached the point of what would have been the normal repayment period, and received advice from all and sundry that perhaps he might slip into the bank with a bit of loose change, and pay off the capital, he declined. He rather liked the idea of his infinity mortgage being just that, or at least being with him until his death. In that he will succeed, you know what some of these old folk are like. © Jenny Barclay
This is a Snippet Read More
More Articles
2nd Mortgage Ameriquest Mortgage Argent Mortgage Bad Credit Mortgage California Mortgage Chase Manhattan Mortgage Chase Mortgage Countrywide Mortgage Current Mortgage Interest Rate Current Mortgage Rate Exclusive Mortgage Lead Florida Mortgage Company Florida Mortgage Florida Refinance Mortgage Free Mortgage Lead Gmac Mortgage Green Point Mortgage Home Mortgage Banker Home Mortgage Calculator Home Mortgage Interest Rate Home Mortgage Loan California Home Mortgage Loan Home Mortgage Rate Home Mortgage Refinancing Home Mortgage Interest Only Mortgage Internet Mortgage Lead Lowest Mortgage Rate Mortgage Banker Association Mortgage Broker Lead Mortgage Broker Mortgage Calculation Mortgage Calculator Mortgage Company Mortgage Interest Rate Mortgage Irwin Mortgage Job Mortgage Lead Generation Mortgage Lead Mortgage Lender Mortgage Loan Calculator Mortgage Loan For Bad Credit Mortgage Loan Lead Mortgage Loan Mortgage Payment Calculator Mortgage Rate Calculator Mortgage Rate Mortgage National City Mortgage Option One Mortgage Principal Residential Mortgage Refinance Home Mortgage Refinance Mortgage Loan Refinancing Mortgage Reverse Mortgage Second Mortgage Today Mortgage Rate Well Fargo Home Mortgage Well Fargo Mortgage Wells Fargo Mortgage Refinance Mortgage 10 Easy But Essential Steps For Home Selling Success 10 Ways To Boost Your Credit Score 12 Credit Safety Tips Credit Watch 4 Good Reasons To Get A Refinance Home Loan 4 Things To Watch Out For When Choosing A Mortgage Company 40 Year Mortgages An Alternative To Interest Only Loans 5 Magic Points Should I Buy Or Rent My Home 5 Things How Credit Report Rating Can Save You From Ficti 5 Things In Selecting The Best Mortgage You Should Know 5 Things To Look For In A Property Appraiser 5 Tips For Savvy Use Of Your Home Equity Line Of Credit 5 Ways To Raise Credit Score 6 Key Points To Evaluate Online Lenders 6 Reasons For Investing In Florida Investment Property 6 Things To Consider Before Refinancing 6 Things You Must Know Before Buying A Home 6 Ways To Buy Real Estate Without A Deposit 7 Must Know Facts About Free Credit Report A Beginner S Guide To Buy A House A Few Points About Interest Rates A Fresh Start For Family Finances In 2005 A Guide To Uk Buy To Let Mortgages A Home Loan Can Help You Own Your Dream Home Add A Few Dollars To Your Mortgage Payment A New Choice For Home Financing Correspondent Lenders Adjustable Rate Mortgages Understand The Benefits Compa 2 Adjustable Rate Mortgages Understand The Benefits Compa Adjustable Rate Mortgages Offer Alternatives For Home Buyers Advantages And Disadvantages Of A Reverse Mortgage Adverse Credit Mortgage Loan Persistence Is The Key To 2 Adverse Credit Mortgage Loan Persistence Is The Key To All About Secured Homeowners Loans All You Wanted To Know Of Bad Credit Apartment Financing Explained 2 Apartment Financing Explained Apartment Loan 101 Apply For Home Mortgage Loan Online With Bad Credit Th Apply For A Mortgage Keys When Applying For A Mortgage Apply For Home Mortgage Loan Online With Bad Credit Thi Applying For A Home Loan Applying For A Home Mortgage Loan Online The Pros And Applying For A Home Mortgage Loan Online The Pros And Cons 2 Applying For A Home Mortgage Loan Online The Pros And Cons Foreclosure Property Deals Foreclosure Scams To Be Aware Of Foreclosures Nationally On The Rise Fortune 500 Budgeting For Our Personal Lives Foster Home Uses Pay Option Mortgage Loan For California Free Money Saving Auto And Home Loan Tips From Debt To Financial Freedom Get A Low Apr Mortgage Fast Get Control Of Your Finances Get Free Mortgage Quotes From Top Colorado Mortgage Brokers Get More By Offering Seller Financing Get Out Of Debt Get Paid To Market Your Real Estate Business Get Rich With Mobile Homes Get Started Managing Your Money Get That Low Apr Mortgage Fast Getting A Home Mortgage Is Quite Simple Guide To Flexible Mortgages Guide To Home Equity Loans Guide To Home Improvement Loans Guide To Home Insurance Guide To Homeowner Loans Guide To Interest Only Mortgages Guide To Loan Terms Guide To Mortgage Terms Guide To Mortgages In The Uk Guide To Mortgages Guide To Remortgages Guide To Secured Loans Helpful Hints For First Time Home Buyers Mortgage For Those Twilight Years Mortgage Rehabilitation Of Financial Helplessness Mortgage Amortization Mortgage Consumer Bill Of Rights Mortgage Cycling Brilliant Or Risky Mortgage Definitions Mortgage Free In 15 Years Mortgage Glossary Of Terms Mortgage Information Refinancing Second Mortgage Home Mortgage Information Mortgage Insurance Plans How Good Is Yours Mortgage Life Insurance Mortgage Loan Information Know The Basics When You Refi 2 Mortgage Loan Information Know The Basics When You Refi Mortgage Prepayment Penalties Just Say No 2 Mortgage Prepayment Penalties Just Say No Mortgage Reduction Solutions Mortgage Sales Hit Problems Mortgages After Bankruptcy Easier Than You D Expect |
ContributionsArticles |