OT hooray, they got one

Endowment mortgages tended to be cheaper than repayment. I guess the
poor sods you're referring to are those too poor to get on the housing
ladder?

 

When one was offered to me the payments for the endowment added to the
interest on the original loan came to more than the interest plus
repayment mortgage. The promise was I would get lots more when the
endowment policy came to fruition. I don't think anything has changed.

As to getting on the housing ladder that's a different matter.

 

Did it come to more than a repayment mortgage AND life cover for the
term?
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Ben posted:

Curses! I've not watched a lot of TV lately. I may need to remedy
this.

 

Well, IME they were cheaper. I made the mistake of ignoring my 'where's
the catch' reaction and buying two.

Still, since I've got a repayment mortgage now, they're savings vehicles
that will one day provide something. Hmm, one pays out in 9 years time.

 

Just to really rub it in...

....it was a mini series of 6 episodes and it finished last week.

 

Yes!

What has been happening since the mid/late 80 is endowment mortgages
have been sold cheap on the promise that you don't pay so much because
you will make loads later. I think that is what you are thinking about.
The majority of the people who are now in the shit with a deficit in the
endowment to clear their debt are the ones who are finishing a 30 or 40
year term on an endowment mortgage that they have carried over from
their first house purchase. These carry-overs are lumped in with the new
customers to imply it is a new thing so they can get government funding
to dig them out.

 

30 or 40 year term? Can't believe that surely it's 25 years.

The people in the shit purchased 'minimum low-cost endowments'. And, in
any case, a house 25 years ago was, what, average price of 40k?

Assume 90% mortgage and the endowment only meets 80% of it's expected
amount. So they should have 36k but they get 29k. It's a pain, but a
7k shortfall isn't likely to break anyone with a property still in work
and coming to the end of their first mortgage. Well, that is, anyone
with half a brain.

I've got two endowments that won't pay out what I'd expected. Big
fucking deal, I switched to a repayment and keep these as savings
vehicles. Even if they only keep pace with inflation I've still got a
nice little lump maturing in a few years.

 

Ben posted:

Drat!

 

Yes, but as I said these are carried over from a first house purchase.
'Special' terms were often offered to those who just extended and
adapted their endowment mortgages rather than let them re-mortgage when
they traded up the house ladder.

The low cost ones were middle to late 80s.

Most people would mortgage themselves up to the amount they could afford
as they traded upwards often staying with the same company if it was an
endowment mortgage. The house I purchased in 78 was £46k recently
changed hands for £550. If I had traded up with what I could afford I
would have been spending a lot more money a month on a lot more
expensive house, with a possible larger shortfall.

But very few people stay with the same house ( I know only one
personally) and the same level of debt/mortgage.

I changed my approach to houses to fund my retirement.

So what bike are you buying?

 

<>:

Suspect it'll be spent on my children one way or another.

Probably put to one side to help fund house purchases.

 

Getting back to your comment on first time buyers, one of the big house
market influences currently is all the divorced guys who have to leave
the marital home but pay the mortgage who also have to fund purchase of
the cheapest house going to live in rather than rent. This is forcing
the price up for genuine first time buyers.

 

The deficit in investment return has been caused *partially* by the
low interest rate environment we now live in. Which led to cheaper
mortgages.

What have these folks done with the cash that they are not paying in
interest? Saved it to pay of the outstanding capital? Taken out an
additional savings product? Moved into another property right at the
limit of their borrowing power? Or pissed the difference up the wall?

I reckon the last two form the majority.

Linda and I both have endowment policies tied to our original
mortgages. Neither of those are outstanding.

I genuinely cannot see that the problem is anywhere near as reported,
nor can I see that it is *all* the fault of the Life companies.

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I thought it's what the scammers who try to scam the scammers call
themselves too.

 

I think you are right!

Agreed!

 

I can imagine. I'd also suspect a lot of the buy to let houses were at
the entry level.

 

6 episodes isn't really a mini series these days.