Any comments on this suggestion to alleviate probelms for those who purchased at the top of the market.
Concept based on following.
1. Easing burden of those who purchased at peak (2005 - 2008)
2. Ensuring those who do not require help do not feel hard done by
3. Ensuring bank pay a penalty for reckless lending
Concept = Life Loan.
Basics - Institution which holds mortgage offers up to 35% of current outstanding mortgage as a "Life Loan". (percentage would depend on circumstances & when the mortgage was started) This Life loan would be set against the current mortgage thus reducing monthly payment by up to 35%.
The Life Loan would be secured as a floating charge against main residence but can be transferred to another residence or even a thrid party's property if receiver of loan wishes to move abroad (e.g. Parent's property)
The life loan would attract an interest of 1% or less for the remaining term of the current mortgage, but would attract interest of ECB + 1% once the current mortgage term expires.
The life loan may be repaid at any stage, but can also not be repaid until the passing of the owner of the main residence. (both parties in case of joint borrower).
The principal value of the Life Loan would be guaranteed by Government.
The life loan will be ignored for the purposes of obtaining a new mortgage on a decreasing scale.
The benefits -
People will be able to move house without having to pay off the Life loan before obtaing a new mortgage.
More disposable income will allow people live a better quality fo life.
Buffer against upcoming interest rate increase.
Those who do not need help won't see it as them paying for other's mistakes.
Banks will bear the cost of interest on the Life Loan for the duration of the mortgage term with just a small margin afetr the term ends.
Negatives
It passes the problem onto the next generation.
Will not free up credit with banks.
I have no financial expertise and not connected in any way with building, politics, finance, and above concept wouldn't apply to me as I purchased in 2001 - just an idea to take the pressure off many friends I see in difficulty due to the banks throw money around like confetti.
Concept based on following.
1. Easing burden of those who purchased at peak (2005 - 2008)
2. Ensuring those who do not require help do not feel hard done by
3. Ensuring bank pay a penalty for reckless lending
Concept = Life Loan.
Basics - Institution which holds mortgage offers up to 35% of current outstanding mortgage as a "Life Loan". (percentage would depend on circumstances & when the mortgage was started) This Life loan would be set against the current mortgage thus reducing monthly payment by up to 35%.
The Life Loan would be secured as a floating charge against main residence but can be transferred to another residence or even a thrid party's property if receiver of loan wishes to move abroad (e.g. Parent's property)
The life loan would attract an interest of 1% or less for the remaining term of the current mortgage, but would attract interest of ECB + 1% once the current mortgage term expires.
The life loan may be repaid at any stage, but can also not be repaid until the passing of the owner of the main residence. (both parties in case of joint borrower).
The principal value of the Life Loan would be guaranteed by Government.
The life loan will be ignored for the purposes of obtaining a new mortgage on a decreasing scale.
The benefits -
People will be able to move house without having to pay off the Life loan before obtaing a new mortgage.
More disposable income will allow people live a better quality fo life.
Buffer against upcoming interest rate increase.
Those who do not need help won't see it as them paying for other's mistakes.
Banks will bear the cost of interest on the Life Loan for the duration of the mortgage term with just a small margin afetr the term ends.
Negatives
It passes the problem onto the next generation.
Will not free up credit with banks.
I have no financial expertise and not connected in any way with building, politics, finance, and above concept wouldn't apply to me as I purchased in 2001 - just an idea to take the pressure off many friends I see in difficulty due to the banks throw money around like confetti.