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ridiculous mortgage!

ridiculous mortgage!

Old Mar 29th 2009, 4:50 pm
  #1  
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Default ridiculous mortgage!

Our house in the UK has an interest only mortgage on it - as when we left the uk we had to get the monthly repayments as close to (preferably under) the anticipated rental we could get for it. Both mortgage and rental were in excess of 1000 GBP per month at that point. (repayment buy to let mortgages came in above the rental rate so we couldnt afford to go there!).

Anyways - with the rate dropping every few months or so the mortgage payment has been going down and down - and the letter we recieved yesterday just took the biscuit. The whole payment is now a paltry 54 GBP!

If it goes much lower they will be paying us!

Now we just gotta see if we can switch back to a repayment mortgage so we get more paid off!
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Old Mar 29th 2009, 6:17 pm
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Default Re: ridiculous mortgage!

Are you allowed to do like you do here.. send in an additional principle payment, separate from your obligated payment?
Save you the hassle of re-doing paperwork if so.
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Old Mar 29th 2009, 10:25 pm
  #3  
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Default Re: ridiculous mortgage!

Wow 54gbp how nice. I'd keep sending the 1000 and pay it off quick
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Old Mar 29th 2009, 11:04 pm
  #4  
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Default Re: ridiculous mortgage!

Originally Posted by meauxna View Post
Are you allowed to do like you do here.. send in an additional principle payment, separate from your obligated payment?
Save you the hassle of re-doing paperwork if so.
I don't think UK mortgages work that way, unfortunately.
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Old Mar 29th 2009, 11:08 pm
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Default Re: ridiculous mortgage!

Originally Posted by fatbrit View Post
I don't think UK mortgages work that way, unfortunately.
So they don't allow you to pay if off early? Seems silly to me. Or are you saying the extra payment only goes towards interest and not the principle?
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Old Mar 29th 2009, 11:10 pm
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Default Re: ridiculous mortgage!

Originally Posted by sunflwrgrl13 View Post
So they don't allow you to pay if off early? Seems silly to me. Or are you saying the extra payment only goes towards interest and not the principle?
US mortgage products are far superior to UK ones. AFAIK, the option to chuck extra on the principal usually just isn't there.
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Old Mar 30th 2009, 12:44 am
  #7  
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Default Re: ridiculous mortgage!

Originally Posted by sunflwrgrl13 View Post
So they don't allow you to pay if off early? Seems silly to me. Or are you saying the extra payment only goes towards interest and not the principle?
depends on the mortgage, if you pay it off early you might get penalties on it to off set them not making as much money off you...
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Old Mar 30th 2009, 12:52 am
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Default Re: ridiculous mortgage!

Originally Posted by Bob View Post
depends on the mortgage, if you pay it off early you might get penalties on it to off set them not making as much money off you...
I can't see them making much when her bill is 54GBP especially when it used to be 1000.
The more I hear about UK mortgages the less I like. I like that I can bung a bit extra onto the bill for the principal and pay it off and that I have no prepayment penalties and the rate is fixed for the life of the loan (15 years in our case) only 7 years to go.
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Old Mar 30th 2009, 1:11 am
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Default Re: ridiculous mortgage!

Originally Posted by MsElui View Post
Our house in the UK has an interest only mortgage on it - as when we left the uk we had to get the monthly repayments as close to (preferably under) the anticipated rental we could get for it. Both mortgage and rental were in excess of 1000 GBP per month at that point. (repayment buy to let mortgages came in above the rental rate so we couldnt afford to go there!).

Anyways - with the rate dropping every few months or so the mortgage payment has been going down and down - and the letter we recieved yesterday just took the biscuit. The whole payment is now a paltry 54 GBP!

If it goes much lower they will be paying us!

Now we just gotta see if we can switch back to a repayment mortgage so we get more paid off!
I'm trying to figure out how that is possible. I would think that adjustable mortgages are based on some index like in the US (usually 1%-2% above an index). If it is based on the 10 year Gilt (currently 3.26%), then I would suspect that you would still be paying 4%-5%.

If your original interest rate was 7%, you would now be paying less than 1/2% if you are only paying 54 GBP. If that was the case, you could purchase secure UK government bonds with the remaining 946 GBP and make a large amount of money.

So can someone explains how it works in the UK.

Last edited by Michael; Mar 30th 2009 at 1:16 am.
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Old Mar 30th 2009, 1:32 am
  #10  
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Question Re: ridiculous mortgage!

Originally Posted by MsElui View Post
Our house in the UK has an interest only mortgage on it - as when we left the uk we had to get the monthly repayments as close to (preferably under) the anticipated rental we could get for it. Both mortgage and rental were in excess of 1000 GBP per month at that point. (repayment buy to let mortgages came in above the rental rate so we couldnt afford to go there!).

Anyways - with the rate dropping every few months or so the mortgage payment has been going down and down - and the letter we recieved yesterday just took the biscuit. The whole payment is now a paltry 54 GBP!

If it goes much lower they will be paying us!

Now we just gotta see if we can switch back to a repayment mortgage so we get more paid off!
If the interest rate is dropping like that, isn't it a good time to refinance the mortgage to one where you can also pay the principal and not just the interest?
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Old Mar 30th 2009, 1:12 pm
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Default Re: ridiculous mortgage!

Originally Posted by fatbrit View Post
US mortgage products are far superior to UK ones. AFAIK, the option to chuck extra on the principal usually just isn't there.
I always thought this was a neat option: http://en.wikipedia.org/wiki/The_One_account
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Old Mar 30th 2009, 1:37 pm
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Default Re: ridiculous mortgage!

Originally Posted by Michael View Post
I'm trying to figure out how that is possible. I would think that adjustable mortgages are based on some index like in the US (usually 1%-2% above an index). If it is based on the 10 year Gilt (currently 3.26%), then I would suspect that you would still be paying 4%-5%.

If your original interest rate was 7%, you would now be paying less than 1/2% if you are only paying 54 GBP. If that was the case, you could purchase secure UK government bonds with the remaining 946 GBP and make a large amount of money.

So can someone explains how it works in the UK.
My brother has the interest only loan, as he is waiting for his previous house to sell. He was paying about the same as MsElui, and now is paying practically nothing, while renting his other house out. Some people are paying 1 pence a month. A lot of the mortgages were with Cheltenham and Gloucester. It opened up a loophole when the interest rate was cut. Time to pay the piper when the mortgage has to readjust though.
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Old Mar 30th 2009, 1:44 pm
  #13  
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Default Re: ridiculous mortgage!

Originally Posted by Michael View Post
I'm trying to figure out how that is possible. I would think that adjustable mortgages are based on some index like in the US (usually 1%-2% above an index). If it is based on the 10 year Gilt (currently 3.26%), then I would suspect that you would still be paying 4%-5%.

If your original interest rate was 7%, you would now be paying less than 1/2% if you are only paying 54 GBP. If that was the case, you could purchase secure UK government bonds with the remaining 946 GBP and make a large amount of money.

So can someone explains how it works in the UK.
its currently at 0.25% interest. Its at a 2 year discount to the base rate. Paying off anything whilst at the discounted rate usually incurs large penalties - but you can usually stick money in after that period - but it does depend on the mortgage. I wish we could get a fixed rate mortgage right now.
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Old Mar 30th 2009, 2:13 pm
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Default Re: ridiculous mortgage!

I paid of my UK Mortgage by overpaying when interest rates dropped a long time ago. The one I have now also allows me to overpay.

But repayment of capital would not impact the tax aspect, which is I think the issue.
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Old Mar 30th 2009, 3:09 pm
  #15  
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Default Re: ridiculous mortgage!

Originally Posted by fatbrit View Post
I don't think UK mortgages work that way, unfortunately.
Depends on the mortgage. I am just coming out of a fixed rate that allowed up to 10% extra paid off each year, which is quite common. However it may not be on an interest only mortage.
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