baldrick
hmmmmm
you're gonna stay in the same house for the rest of your life?
it's a false perception, imo. my mum bought her first house when she was 25. she's 60 next year and she is STILL paying a mortgage.
Debt question
- Thread starter ChrisFilter
- Start date
it's a false perception, imo. my mum bought her first house when she was 25. she's 60 next year and she is STILL paying a mortgage.
spanglechick
High Empress of Dressing Up
when you remortgage, it's common not to sign up for another 25 years.
EastEnder
Brixton Barnacle
Agreed.
What it really boils down to is, do you want to save a small amount of cash by switching the debt to a secured form, in return for increasing the risk of losing your home, should the shit really hit the fan.
And given the way the economy's going, the spectre of failing companies and rising unemployment rates can't be ignored.
I know if I was Filter's boss and things were going downhill, he'd definitely be first out the door.
Truth be told, I probably wouldn't wait that long, excise the dead wood early, chop off the diseased limb before the rot spreads, flush out the clogged sewers before the smell gets too bad, etc.
baldrick
hmmmmm
i know
my mum's still paying a mortgage because she had to give my dad six figures to get rid of him.the issue is that your life circumstances will change. saying that you're getting a mortgage so that in 25 years time you won't have to pay for housing, is really naive.
Unfortunately it's an illusion that debt can be compartmentalised, with an unsecured debt having no impact on property.
£25K of debt, if defaulted, could start bankruptcy proceedings, which would involve the equity available in the house, and property sale.
A more likely route would be that if the 'unsecured' debt defaulted it would end up in county court, with a CCJ issued. The CCJ would then have an agreed repayment schedule. If that was defaulted then it would return to county court, a 14 day repayment in full order issued, & if that was not met a charging order would be issued against the property, and sale would be enforced.
Speak to a debt adviser at your local CAB or Advice Centre if you need to confirm this advice, but I'm afraid that 'unsecured' is a misnomer if you own property, it just means that the value of equity was not explicitly considered when the loan was granted. Why do you think so many companies that offer 'unsecured' loans will only do so to home-owners...
i know
the issue is that your life circumstances will change. saying that you're getting a mortgage so that in 25 years time you won't have to pay for housing, is really naive.
You're right I suppose but, with a mortgage, there is a chance that in 25 or whatever years time, you won't have to pay anything. With renting you can be certain you'll be paying for ever. You pays your money . . . .
The best plan I think is to find somewhere nice that you want to live, if you can - whether rented or owned (by the bank). Buying somewhere with the aim of making money is a mug's game.
Anyway, it's all shite - I hate the fact I can discuss mortgages.
ChrisFilter
Like a boss.
i know
the issue is that your life circumstances will change. saying that you're getting a mortgage so that in 25 years time you won't have to pay for housing, is really naive.
Is this a bit like when you asked if I understood basic maths?
I'm aware that it's not as simple as I made out, but to make a point on here I simplified it.
No, I don't plan on living in the same house all my life.
You're quite patronising!
Unfortunately it's an illusion that debt can be compartmentalised, with an unsecured debt having no impact on property.
£25K of debt, if defaulted, could start bankruptcy proceedings, which would involve the equity available in the house, and property sale.
A more likely route would be that if the 'unsecured' debt defaulted it would end up in county court, with a CCJ issued. The CCJ would then have an agreed repayment schedule. If that was defaulted then it would return to county court, a 14 day repayment in full order issued, & if that was not met a charging order would be issued against the property, and sale would be enforced.
Speak to a debt adviser at your local CAB or Advice Centre if you need to confirm this advice, but I'm afraid that 'unsecured' is a misnomer if you own property, it just means that the value of equity was not explicitly considered when the loan was granted. Why do you think so many companies that offer 'unsecured' loans will only do so to home-owners...
agree but the proceedings above take account of your ability to pay - i.e. you could come to an agreement where you pay a small amount and still not get the house involved. whereas mortgage defaults will see you facing repossession in matter of months......still sounds better to me.
ChrisFilter
Like a boss.
Unfortunately it's an illusion that debt can be compartmentalised, with an unsecured debt having no impact on property.
£25K of debt, if defaulted, could start bankruptcy proceedings, which would involve the equity available in the house, and property sale.
A more likely route would be that if the 'unsecured' debt defaulted it would end up in county court, with a CCJ issued. The CCJ would then have an agreed repayment schedule. If that was defaulted then it would return to county court, a 14 day repayment in full order issued, & if that was not met a charging order would be issued against the property, and sale would be enforced.
Speak to a debt adviser at your local CAB or Advice Centre if you need to confirm this advice, but I'm afraid that 'unsecured' is a misnomer if you own property, it just means that the value of equity was not explicitly considered when the loan was granted. Why do you think so many companies that offer 'unsecured' loans will only do so to home-owners...
Thanks for this. I don't think either myself or lunatrick were in any doubt that if they can fuck you, they will, but it being unsecured debt does means it's harder to fuck you if I was ever to default.
Anyway, should be (unsecured) debt free in a couple of years which is nothing in the grand scheme of things, and don't ever plan on defaulting on either.
EastEnder
Brixton Barnacle
It's more optimistic than naive....
Don't forget that many people never actually need to pay off their whole mortgage - they trade up, from one property to the next, renewing the mortgage each time on an ever bigger/flashier house, till they hit 60 or 70, then they sell up - hopefully having enough from the sale to settle the outstanding mortgage, buy a nice little cottage and have a tidy nest egg left over.
A default on a mortgage should end up in court at a possession hearing with an assessment of ability to pay, then a suspension of the possession dependant on the repayment schedule being 'honoured', similar process, just a different route but potentially a similar timescale. It's defaulting on the court agreed repayments that means you will be deep in shit.....
The extra factor that needs to be taken into account is 'who is the lender?', with some of the '1st National of Ruritania' loan companies just going straight for the equity, secured or unsecured.
The important advice is to get advice, as soon as you think there's a problem. Many CABs & local advice centres have specifically trained debt advisers, a BERR funded initiative.
Personally, if I was in the situation outlined, I'd be looking at how much the loan is costing me to finance. £25K @ 14% is £3,500 pa, @ 7.9% is £1,975, 5.5% = £1,375.....
Good luck.
ChrisFilter
Like a boss.
Unfortunately those were the best rates we could get at the time. Far from ideal, but I guess that's what you get for being reckless with money in your youth!
EastEnder
Brixton Barnacle
How does that work then? Can they actually force you to sell your property?
ymu
Niall Ferguson's deep-cover sock-puppet
Plenty of use outside London.
Not really - rents go up with inflation, mortgage payments don't. If rent = mortage, you'll notice the difference by year 2.
That's annual costs - dumping debt onto a 25 year mortgage gets you a cheaper interest rate but you pay it off much slower and so accumulate a lot more interest. It's a means of reducing your monthly outgoings in the short-term, but long-term you pay a lot more.
I'd look for a better loan rate on the 25k, but keep your mortgage separate unless you absolutely can't meet the monthly payments (which clearly isn't the case).
Unfortunately, yes, at the end of a county court process.
That's true, if you stick to the 25 (or whatever the mortgage term )year period. But not if you use the extra savings to make additional capital payments on top of monthly repayments, and so reduce the term.
In the end, if you can make steep repayments over a short period of time then the debt gets cleared quickly which is great. It's just that I can see that happening with a £5K loan for example, but on a £25K is a big ask.
ymu
Niall Ferguson's deep-cover sock-puppet
A better rate on a 25K unsecured loan? In the current financial climate?
Nice to see optimism's not dead!
Still, they're relatively high earners with a property that effectively secures any lending and a (presumably) healthy credit rating. And they're in a better financial position now than when they first agreed to those extortionate rates. I would think they ought to be able to get a better deal. The banks still need to do business - they ought to be fighting over the low risk customers now that they've dumped the temporarily lucrative high risk ones.
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