Topic: CREDIT CRUNCH

[Borlotti]

Good news at last if Iceland has gone.  Won't have to watch that terrible advert.  Perhaps Asda will go and we will not have to watch them all patting their bottoms. 

[Rhubarb Thrasher]

in order to raise funds for Iceland, Bjork has just put herself up for auction on ebay! I shall certainly be bidding  ;D

[jonny211]

I found her but she's gone so loopy she's turned into a hamster house.

http://cgi.ebay.co.uk/Medium-Bjork-Natural-Wood-Hamster-Gerbil-Pet-Home-6161_W0QQitemZ290266162552QQcmdZViewItem?hash=item290266162552&_trkparms=72%3A1297%7C39%3A1%7C66%3A2%7C65%3A12%7C240%3A1318&_trksid=p3286.c0.m14

Slightly OT but I've a question for Ollie - and anyone. My brain just isn't wired to understand how mortgages work.

I have a mortgage and my introductory period ends in three years time and it was for 5 years. So during that 5 years I've paid off say £50k. As I understand it that's mostly going towards paying off the interest on the mortgage, not knocking down the amount borrowed.

So if I then remortgage with a different lender do I have practically start over again as my £50k hasn't paid much if at all anything off of my mortgage - only the interest?

If so doesn't this sound like a massive scam weighted in the favour of the lender as the payments barely touch the amount for the loan rather than going 50/50 on the loan and interest?

OT again looking at the definition of usury which I believe mortgages to be, I found this:-

Pope Sixtus V condemned the practice of charging interest as "detestable to God and man, damned by the sacred canons and contrary to Christian charity

Cheerio.

Jon

[SamLouise]

Our savings are with Icesave and have now been frozen.  Just effing fantastic.

[ceres]

Our savings are with Icesave and have now been frozen.  Just effing fantastic.

So sorry to hear that.  Just watching the news, they are saying that deposits up to £50k are protected with £16k from the Iceland government and £34k from the FSA but it will take a few months to come through.  What a mess. 

[ninnyscrops]

Could someone tell me where the £50 billion is coming from to "lend" to the banks ???

[Frampers]

I have a mortgage and my introductory period ends in three years time and it was for 5 years. So during that 5 years I've paid off say £50k. As I understand it that's mostly going towards paying off the interest on the mortgage, not knocking down the amount borrowed.

So if I then remortgage with a different lender do I have practically start over again as my £50k hasn't paid much if at all anything off of my mortgage - only the interest?

Hi Jon

I'm no mortgage broker but I believe that it depends upon the type of mortgage you have. If it's repayment then you pay back some of the capital i.e. the initial amount you borrowed plus the interest. If it's an interest only mortgage (more usually known as an endowment or pension mortgage) then yes you are only paying the interest accruing. The added kick in the teeth with these is that the value of your endowment/pension has probably plummeted along with the rest of the stock market.  :(

Only know this because my mortgage is due for rebroking and I've spent several hours today talking to the mortgage broker.

HTH and I'm sure that OllieC will be along to give you the complete answer.

Frampers

[jonny211]

Ah yes, I should've added that it's a repayment mortgage - told you I was clueless!

Jon

[jjt]

jonny211, I'd agree with Sixtus V. Muslims don't do usury. They have I think special mortgages to get round it, not sure of the details.

[OllieC]

Morning all, on this lovely sunny day (also my BIRTHDAY!!!)...

I think "bankspeak" makes the interest calculation more complicated than it has to be. For nearly all lenders, having a mortgage is no different to having savings, just a minus sign in front. The graphs they show you, Interest Only vs. Repayment do little to clarify things. After any period of time, you owe the original loan, plus any interest, minus any payments.

An approximate example (approximate for rather dull reasons, but very close to the truth!) is:

Mortgage of £100,000, Interest rate of 6%, 25 years repayment = monthly payment of £651.89.

At the end of month one, the interest added is (6% of £100,000) divided by 12 = £500

Your payment is £651.89, so you have reduced the balance by £151.89, and do the same sum next month, by which time the loan is slightly smaller, so you pay slightly more capital off.

If you paid £858.02 each month, you would finish repaying the loan in 15 years...

I don't know that I've explained it very well - the shorter answer is that if you remortgage after the "Initial Benefit period", and keep the term the same as whatever's remaining, then you'll still be on track to finish when you originally intended...

Does this help at all? I was out rather late last night having a birthday curry & drinks! Most people don't get it, if it's any consolation. I've known plenty of mortgage brokers who don't actually get the maths!

[thifasmom]

Morning all, on this lovely sunny day (also my BIRTHDAY!!!)...

Have a good one :)

[Barnowl]

Mortgage of £100,000, Interest rate of 6%, 25 years repayment = monthly payment of £651.89.

At the end of month one, the interest added is (6% of £100,000) divided by 12 = £500

Your payment is £651.89, so you have reduced the balance by £151.89, and do the same sum next month, by which time the loan is slightly smaller, so you pay slightly more capital off.

Here's the first year using Ollie's example - hope it's correct

      Interest         Payment   Outstanding Loan
Initial Loan                            100,000.00
      
Month 1   500.00   651.89   99,848.11
Month 2   499.24   651.89   99,695.46
Month 3   498.48   651.89   99,542.05
Month 4   497.71   651.89   99,387.87
Month 5   496.94   651.89   99,232.92
Month 6   496.16   651.89   99,077.19
Month 7   495.39   651.89   98,920.69
Month 8   494.60   651.89   98,763.40
Month 9   493.82   651.89   98,605.33
Month 10   493.03   651.89   98,446.47
Month 11   492.23   651.89   98,286.81
Month 12   491.43   651.89   98,126.35

Interest Paid   5,949.03      
Capital Re-paid      1,873.65

As each month passes the loan reduces so the interest  reduces and more of the payment goes towards reducing the original loan: In the first month £151.89 is repaid in the twelfth month £160.46 (651.89-491.43)

Happy Birthday Ollie! :)

[RobinOfTheHood]

Could someone tell me where the £50 billion is coming from to "lend" to the banks ???

THE government is to invest £500bn of your money in British banks so they can lend it back to you with interest.

The historic move is being hailed as a lifeline for the financial system as long as nobody asks too many questions.

Julian Cook, chief economist at Corbett and Barker, said: "The government will give your money to the banks so the banks can start lending you that money, probably at around 7% APR.

"Thanks to all the interest you're paying on your own money, the banks will make billions of pounds again and normality will be restored.

"After a few years of this the government will cash in the bank shares it bought with your money and use the profits to build a huge f**k**g dome somewhere."

He added: "In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot."

Chancellor Alistair Darling said the decision had been taken in tandem with the banking industry, adding: "They used a lot of dirty words I'd never heard before and one of them had an angry looking dog."

Meanwhile, Emma Bradford, a sales manager from Bath, said: "Why doesn't the government just give my money to me so I can buy stuff from businesses who will then make a profit and put it in a bank?"

But Mr Darling insisted: "Shut up."


 :)  Hope that helps.

[OllieC]

I think I've worked out where it's coming from... they're going to crank up the power on that big old printing machine & make it! Easy peasy!

A grand from every adult in Britain - it's a huge amount of money. It's a sorry state of affairs when the Tories are getting Labour to promise to control fat-cat city pay. Come on now Mr Cameron, whatever happened to a Free Market Economy?!?!

[Rhubarb Thrasher]

http://www.brillig.com/debt_clock/

[Sinbad7]

I find just as alarming that our local council's who can hardly afford to pay for anything in our communities have millions invested in Icelandic banks!!!!!!!!!!  Why?????  Whose getting fat on this little scandal?  Not us Council Tax payer's that's for sure.

Sinbad

[Rhubarb Thrasher]

from the US Treasury website

How do you make a contribution to reduce the debt?

Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

 ;D ;D ;D ;D

[sawfish]

who knows maybe the society of greed started by Thatcher and her mob may result in a backlash.

That program the other night about hedge fund investors and how they will actually benefit from all the bad stuff thats happening now was repulsive.

[redimp]

I would be very interested to see a breakdown of the colour of the local authorities that lost money in the long term high interest Icelandic bank accounts.  I have searched the web and not been able to find such a breakdown so if anybody knows of anything, could they link me to it please.

[Sinbad7]

I only know about my own borough which is coloured blue and invested £20 million.