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April 18th, 2012 
FAKE NEWS for the Zionist agenda
By
Lauren Thompson
18:32 EST, 17 April 2012
|
05:21 EST, 18 April 2012
Walter Harper has lived in his beloved home for two decades — but last July he was forced to put it on the market.
He shared the Luton bungalow with his wife and, after she passed away, his partner, and has watched his grandchildren play there. But he is being forced to move because he owes £110,000 on an interest-only mortgage that he can’t afford to repay. Instead of spending his last days in the house he loves, he will be forced to rent elsewhere.
Mr Harper, 69, first put his house on the market for £230,000. He has dropped the asking price by £20,000 and even if he gets this, he will still lose half of the money paying off the bank.
These are savings he desperately needs, as rent is going to cost him almost £9,000 a year.
Trapped: Walter Harper plans to rent near his daughters and their children as he can’t afford to repay his mortgage
Like so many others caught in the
interest-only trap, Mr Harper is being forced to leave his family home
because of an investment that performed far worse than predicted.
‘I had hoped to own my home by now. This wasn’t what I planned for my retirement at all,’ he says.
When Mr Harper took out his mortgage, he was also saving into a with-profits pension.
In 1997 he was told this would
eventually be worth £276,000, allowing him to take £69,000 as a cash
lump sum to pay off most of what he owed.
But when he retired in 2008, his pension was worth half this amount,
leaving him £78,500 short.
He plans to rent near his daughters,
Lesley and Tracy, and their children. He’ll use what is left from the
house sale to supplement his pension income.
Mr Harper’s tale is far from unusual.
There are almost four million homebuyers in Britain with interest-only
mortgages.
With these mortgages, borrowers pay only the interest on the loan, but
don’t have to pay back any of the capital on the property. This happens
when the loan matures, usually at the end of 25 years.
Interest-only deals became popular in the Seventies when people were
attracted to them because they looked cheap in comparison to loans where
you repaid the capital as well.
Homebuyers planned to pay off their
capital by using money from an endowment — a type of savings plan linked
to the stockmarket.
In the Eighties and Nineties, interest-only loans boomed, driven by
commission-hungry bank salesmen who promised huge profits on the
endowments.
People were sold a dream that taking one out would not only pay for the
mortgage, but also provide them with a handsome lump sum, which they
could spend on the holiday of a lifetime and a car. Now thousands, like Mr Harper, who believed this sales pitch have been caught out.
In the housing boom of the late
Nineties, a different problem emerged. Homebuyers took interest-only
deals as they were the only way of stretching wages to buy a house.
Many of these desperate homebuyers now find themselves trapped.
This is what has snared National
Trust recruiter Dee Wadham. She took an interest-only mortgage in 2004,
just as the property bubble was about to peak.
She bought a one-bedroom cottage in the Cornish village of Par for
£120,000 with her partner.
Trapped: Dee Wadham is not sure how she will repay the £68,000 she will owe when the mortgage term ends in 2021
After they separated, she bought him
out and took an interest-only loan so she could afford the mortgage on
her £17,000 a year salary.
As house prices rose, she took on a bigger mortgage in order to renovate
the house.
Her monthly repayments on the £68,000 loan are £185, but this wipes out a
huge chunk of her take-home pay.
Dee is not sure how she will repay
the £68,000 she will owe when the mortgage term ends in 2021.
Her hope is she will be able to extend the mortgage term, but she will
be 64 when it matures and banks are reluctant to lend to older customers
these days.
Another option is to pay off chunks
of capital as and when she can.
‘At no point did anybody say to me: “There is no way you can afford to
pay back that amount of money.” I am sickened and worried about the
future,’ says Ms Wadham.
City watchdog, the Financial Services
Authority, has warned of an interest-only timebomb for 1.3million
people whose mortgages mature within the next eight years.
But industry trade body the Council of Mortgage Lenders is playing down the concerns. It says most of those
caught in the interest-only trap have benefited from years of house
price growth and so can use this equity as a way of paying off their
loan.They also believe many will have savings to pay it off.
It’s true that many borrowers have large chunks of equity.
Despite recent falls in some parts of
the country, since 1987 average property prices are up 279 per cent.
This should give the average homeowner at least 75 per cent equity.
But even the banks have wised up to the risks of homeowners banking on
property price increases to pay off their loans.
New rules make it difficult for customers to use this as a way of trading up the ladder.
This threatens to affect millions of younger homeowners who bought before these restrictions came in to place.
Chloe Halstead, 26, took an interest-only deal in 2009 when she bought a
three-bedroom semi in Ewloe, North Wales. A repossessed property, it
cost a knock-down £80,000 — and while house prices in the region have
been falling since then, hers is now worth £110,000.
Optimist: Chloe Halstead plans to sell soon to buy a bigger house
She chose an interest-only loan, like many first-time buyers, because
it dramatically reduced her monthly payments.She plans to sell soon to
buy a bigger house. Though experts say Ms Halstead may find herself
trapped by the new mortgage rules, she is confident about the future.
‘I’m not worried about paying the
capital because I know I’ll be able to sell at a profit,’ she says.
‘Interest-only is very handy for people looking to invest in property
and I hope the banks don’t take away these loans completely.’
Her optimism is typical of many
youngsters who sign up for interest-only loans. Mortgage brokers still
believe these are an excellent way for those on low incomes to take
their first steps on the property ladder — as long as they start to make
capital repayments, or savings, after a few years.
The problem is many don’t. And years later they are forced to turn to friends and family, or the banks for help.
Many rely on an inheritance to pay off their mortgage.
In 1990, Allan Keith Dixon, 58, and
his wife Maureen, 62, took out a £100,000 interest-only loan for their
bungalow in Tyne Wear. They also took out an endowment policy, but
this failed dismally.
Their house is now worth £325,000, but they don’t want to sell. Instead
they will extend their mortgage term until they receive a windfall from
a relative.
‘We will just keep paying our mortgage until we receive our
inheritance,’ says Mr Dixon, a retired teacher who became a mortgage
adviser.
How a cheap deal became a financial disaster
Why did people take out interest-only deals?
From the Seventies until the turn of the century, interest-only mortgages were the most popular type of loan.
Most people were attracted to them because they looked cheap by comparison to capital repayment deals.
At
a rate of 4per cent, interest-only payments are £500 a month on a
typical £150,000 loan, compared with £792 a month for someone on a
capital repayment mortgage.
The difference is that interest-only borrowers need to pay off the
capital part of their loan when their mortgage term ends — typically
after 25 years.
Largely,
homebuyers planned to pay off their capital by using money from an
endowment — a type of savings plan linked to the stockmarket. In 1988
alone, more than one million homebuyers took interest-only loans. In
1992 three out of every four mortgages taken by homebuyers were
interest-only.
Though the popularity of endowments began to decline after the year 2000
a new trend began to emerge — a rise in the number of homebuyers taking
interest-only loans who had no idea how the capital would be repaid.
As house price increases raced ahead of average wage rises, first-time
buyers saw interest-only deals as a way of getting a foot on the
property ladder.
Many had small deposits, but interest-only deals allowed them to cut
their repayments and borrow more. In some years, as many as one in five
of all first-time buyers used this arrangement.
What’s the problem?
City watchdog the Financial Services Authority (FSA) has warned
1.3million borrowers whose interest-only loans mature between now and
2020 that they face a ‘ticking timebomb’ — they have no way to repay the
loan.
Its data suggests there are 320,000 interest-only borrowers who have
missed or were late with at least one mortgage payment.
Its fear is that if homeowners can’t even afford the interest on their
loan they will never be able to repay the capital.
On
average, homeowners with loans maturing in the next 12 years will have
to pay off £59,000, according to trade body the Council of Mortgage
Lenders (CML).
More than 2.5million households will see their interest-only mortgage
mature after 2020, with an average debt of £155,000 to pay off.
Many of those with loans maturing may have never put savings in place to
pay them off.
Others
may have started with good intentions and put money aside, but ended up
using this for childcare, school fees or other living costs.
Thousands more have seen their savings plans, typically an endowment,
deliver far less than expected.
The
vast majority of endowments sold alongside mortgages were with-profits
policies.
Many whose policies mature this year were told to expect upwards of
£100,000 from their plans — based on a £50-a-month saving by a man who
took out a policy nearing his 30th birthday. But returns have nosedived
by as much as 44 per cent in recent years.
Weren’t people warned?
Many were. Those relying on endowment policies to pay off their mortgage
receive a projection letter from their insurer every two years.
These are colour-coded — red if a shortfall is expected, amber if a
shortfall is likely, and green if the policy is on track to pay off the
mortgage.
Despite
this disappointment, some took action and put aside alternative savings.
But this was not possible for those on already-stretched budgets.
Many consumers won redress for being mis-sold an endowment, on the
grounds that the risks were not properly explained to them. This cash
was supposed to be used to help them pay off their mortgage — but many
simply saw it as a windfall and spent it.
Many
borrowers missed the deadline to claim redress, and others never got
the chance because of complicated regulations governing who sold them
the loan.
Recently banks have been writing to interest-only customers reminding
them to make plans to pay off their capital.
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Banks have some responsibility for lending the money and should put in place a structure that will help people retain their homes, they were happy to lend when it looked good for them of course they were not going to say no when they get big bonuses for getting more customers but they are also responsible for the advice they have given and should come up with an answer to support those that need it.
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DM its clear yet again you make a sensationalist comment on mortgages without knowing the facts. So do your research before printing this trype, Interest only mortgages have always been sold with the implicit warnings that it is the lenders responsibility to repay the capital at the end of the term, you will also find that the wording does not preclude repayment mortgages from this either as repayment does not 100% guarantee the balance will be cleared at the end of the original term depending on charges upon the mortgage etc. Maybe you should consult a qualified individual in future who is able to advise on mortgages before making up this rubbish.
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Amazed at all the bitter and twisted posts here. Read the story for once. This is about a failed with profits pension not an interest only mortgage. At certain times in your life an interest only mortgage makes perfect financial sense. 35 years old, 2 kids going through school and you trying to minimise the amount you pay each month in mortgage.Oh no hang on what are you going to do in 30 years time when you need to repay it? Sometimes you just need to worry about how to get through the here and now not what happens in 30 years.Smug bitter savers getting petty 3% ,you are testament to financial prudence. Watching your savings dwindle every month as inflation eats away at it. Get off your high horses.
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When I found out that the endowment I had would not cover my mortgage I changed my mortgage from part interest/part repayment to all repayment, as advised on ALL of the letters I received from the insurance company. Why hasn’t anyone else done that?? It is initially a bit more expensive but not excessively so!
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Astounded , The land that May is slowly making happier., 18/4/2012 11:47
You’ve made the same comment on here twice!! You try and make out you are more clever than everyone else. But where do you get the figure of £10 a month for an endowment policy? Over 20 years ago the endowment for a £52,000 mortgage was 80 odd pounds a month. This money was supposed to get interest paid on it over the 25 years just like a savings account would. Where did you get your infomation? If you dont know what you’re talking about I suggest you shut up!!
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They took ”interest only” so that they could live in a house they couldn’t afford – the chickens are now coming home to roost. No sympathy!!
– Jeff Richardson , Expat and UK taxpayer – France, 18/4/2012 11:57
Oh for goodness sake. We have just had the worst recession for 80 years. Many people who would have survived a normal recession were just swamped in their industry by redundancies. It is no more valid to be hard hearted towards someone struggling with a mortgage in a recession than it is to criticise a pensioner finding it hard to pay their gas bills. People do have misfortunes in life and I just don’t understand the spite shown towards those down on their luck.
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Griswald Goodsoup, UK, 18/4/2012 11:56
How exactly does a man only in power a few years cause a problem going back decades?
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There are all sorts of coments here about stupid people who get themselves into trouble but this is not necesarily so. In the late 80s I got trapped by just such a mortgage but it was a double whammy because it was at the time of the negative equity bubble so I could neither sell the house for what was needed to pay the loan nor could I sell it short because the building society would not let me hold the remainder as unsecured debt would push me into bankruptcy so I kept paying monthly interest without prospect of being able to sell or own. Eventually I placed the keys to the property in an envelope walked away. I have neither been bankrupt or paid back. People who find themselves in these financial traps have usually done so because the “financial advisor” or bank loan arranger has sold them on a complex scheme which is most lucrative for him. They bear no personal responsibility, just as the gamblers in the city for the consequences if it goes wrong or is not as was portrayed….
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At no point did anybody say to me: “There is no way you can afford to pay back that amount of money.” How Ms. Wadham can say this with a straight face beats me. Of course you cannot pay it back if you do not have it. But who told you to overextend in such a fashion – £185pm is still less than 10% of her salary. This indicates a basic lack of common sense and terminal stupidity. There are many young people who have taken out repayment mortgages and they are cutting their clothes according to the cloth available to them. Good luck to them. Buying a property involves sacrifice and hard work. Getting an interest only mortgage does not mean that some kindly banker is giving you extra spending money. Some of these people didn’t see beyond the end of their noses and if they were not saving at the same time then they have only themselves to blame.
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Interest only mortgages have their place – we used one as a bridging loan to buy are house rather than rent until we could sell. It was well within our means, cheaper than rent and meant we could move easily, and being seen as not being in a chain helped with sale negotiations.
I don’t understand the logic of someone using interest only as a long term vehicle. You’re giving the bank the equivalent of rent whilst being responsible for the property which you won’t own at the end of the day – unless you’re looking at any equity being used to go towards a smaller property or to form part of a pension. They may as well rent – we are far too reliant on the idea of the right to own our property. Surely if we can take anything away from recent market/credit events it is that the continental norm of rental is not a bad option, but unfortunately the government is hell bent on encouraging home ownership. We need to sort out this mess, not make it worse!
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