Author Topic: Numpties  (Read 4852 times)

Alan2

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Numpties
« on: October 25, 2012, 11:37:18 AM »
Numpty (noun):  Person with interest only mortage and not paying off the principle, and not having a strategy to pay it off.

http://www.thisismoney.co.uk/money/mortgageshome/article-2222590/MMR-Interest-mortgages-stay-execution-new-rules-save-mortgage-prisoners.html

A case study:

http://www.thisismoney.co.uk/money/mortgageshome/article-2222865/I-afford-pay-68k-debt-home-Interest-loans-leave-millions-unable-repay-mortgages.html

I earn what she does/did, and I could pay that kind of mortagage.  Hard work, mind you, but to keep a roof over my head in my old age...

Jamesqf

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Re: Numpties
« Reply #1 on: October 25, 2012, 11:55:04 AM »
"Interest-only mortgage"?  Isn't that called "renting"?

clarkai

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Re: Numpties
« Reply #2 on: October 25, 2012, 11:55:56 AM »
We inherited one of these. I think she basically viewed it as a long-term rental where she had the freedom to grow a large garden, and change the house how ever she wanted. We're in the middle of fixing it up to sell (it's a 30 year old mobile home- it's got some issues despite her diligent care), but that mortgage is still mighty depressing.

igthebold

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Re: Numpties
« Reply #3 on: October 25, 2012, 11:56:02 AM »
"Interest-only mortgage"?  Isn't that called "renting"?

No, you can quit a lease. This is slavery. :\

tooqk4u22

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Re: Numpties
« Reply #4 on: October 25, 2012, 01:20:24 PM »
"Interest-only mortgage"?  Isn't that called "renting"?

No, you can quit a lease. This is slavery. :\

Nope, this is temporary slavery....if you have little to no cash equity in your house you can quit a mortgage too with little consequence other than a ding to your credit - heck and if becomes too much you just quit paying everything and live for free for 9-12 months until the sherrif comes to kick you out.  On the other hand if the housing market ever recovers you get the benefit of the upside appreciation....

in fact this could be the smartest way to buy a house.....limited downside, all upside.

strider3700

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Re: Numpties
« Reply #5 on: October 25, 2012, 05:07:25 PM »
maybe not.  Up here after you give the keys back to the bank, they sell the house and subtract what they got from the sale from your mortgage.  After that if you still owe money you still owe them money.  I don't know if bankruptcy gets you out of that situation or not.  I know of one guy that walked away from his condo and finished making payments to the bank for it it 4 years later. 

JJ

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Re: Numpties
« Reply #6 on: October 25, 2012, 09:02:32 PM »
It's can be awesome approach in inflationary times.  Basically the principal on the loan devalues in line with inflation.
At 3% inflation a $100K loan becomes worth $40K in 30 years'  time in today's dollars, at 5% inflation it is a little over $20K, and at 10% it is less than $5K.  Of course, in deflationary or stable times it can bite you on the bum but this hasn't applied to much of the last century.

My first business landlord bought an acre property 10kms out of Perth (Australia) CBD for $14 around WWII time.  His dad told him he was crazy for spending so much for a place in the boondocks.  He sold it in 2000 for around $2M.  I would love to have had the interest only loan on that...  I guess 60 years is a long wait though, particularly if you are setting out for early retirement.