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Finances / Finanzen » uk.finance » Northern Rock hides a housing disaster
| Northern Rock hides a housing disaster [message #377719] |
Di, 04 April 2006 04:43 |
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Northern Rock recently announced excellent results for shareholders,
and their board should be proud of the profits they have made.
In the shadow of the mountain of lenders like Northern Rock, is a
hidden story that one day soon will be told on the backs of a tsunami,
that will wipe out many families, homes and lives when the housing
bubble bursts.
Northern Rock has taken a significant share of a market of deluded and
greedy home owners, who have involved themselves well beyond their
financial means in a housing market that is about to turn against them.
Northern Rock offers first-time buyers loans six times their income and
125% the value of the property. It is all easy money. The interest
rates being low and a nice earner can be made from buying and selling
houses to fund higher credit card spending and more loans.
Lending by Northern Rock has gone up 26% in the last 3 months,
assisted by a still strong housing market. Here is the catch. Most of
those "new loans" are remortgages. In reality the customers are in
financial distress and are reorganising their finances by taking out
mortgages on top of mortgages. Within the figures by Northern Rock is a
hidden story of increased bankruptcies and repossessions. Northern Rock
has a way of keeping the profits coming in as they will seek "quicker
crystallisation on defaulting loans where they are higher-risk loans;"
in otherwords default on a payment to Northern Rock and say goodbye to
that nice expensive house that will be repossessed quickly, sold off
cheaply, whilst the remaining cash is taken when the greedy customer is
shoved into bankruptcy. You got to laugh, I did!
Mabon Dane
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| Re: Northern Rock hides a housing disaster [message #377736 ] |
Di, 04 April 2006 16:16 |
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On 4 Apr 2006 04:26:32 -0700, "Crowley" <crowalas1234 [at] yahoo.co.uk>
wrote:
>
>Mabon Dane wrote:
>> ................................... In reality the customers are in
>> financial distress and are reorganising their finances by taking out
>> mortgages on top of mortgages...............
>
....but the management and the stock market don't know all this? I
don't think the shares moved much on the latest results.
Tiddy Ogg.
http://www.tiddyogg.co.uk
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| Re: Northern Rock hides a housing disaster [message #377738 ] |
Di, 04 April 2006 18:05 |
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"Mabon Dane" <mdane [at] h2009.com> wrote in message
<
> Northern Rock
> has a way of keeping the profits coming in as they will seek "quicker
> crystallisation on defaulting loans where they are higher-risk loans;"
> in otherwords default on a payment to Northern Rock and say goodbye to
> that nice expensive house that will be repossessed quickly, sold off
> cheaply
Not cheaply, but quickly, better to shake down the defaulters and offload
their properties in a buoyant market than a cooler one.
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| Re: Northern Rock hides a housing disaster [message #377768 ] |
Mi, 05 April 2006 09:03 |
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"Crowley" <crowalas1234 [at] yahoo.co.uk> wrote in message
news:1144149992.644690.325330 [at] t31g2000cwb.googlegroups.com...
>
> Accounts from debt charities indicate that many people are taking on
> more debt to pay existing debt. It's a downward spiral.
>
Why? If you owe on a relatively high interest credit card that you are
paying off only slowly if at all, xferring it to cheaper debt is what you
should do.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Northern Rock hides a housing disaster [message #377772 ] |
Mi, 05 April 2006 12:00 |
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Tumbleweed wrote:
> "Crowley" <crowalas1234 [at] yahoo.co.uk> wrote in message
> news:1144149992.644690.325330 [at] t31g2000cwb.googlegroups.com...
>>
>> Accounts from debt charities indicate that many people are taking on
>> more debt to pay existing debt. It's a downward spiral.
>
> Why? If you owe on a relatively high interest credit card that you are
> paying off only slowly if at all, xferring it to cheaper debt is what you
> should do.
Yes, that's what you should do, but not if you're planning to pay it
off over the same long term as the rest of the cheap debt, otherwise
it can become more epensive.
Adding the cost of, say, a car to your mortgage will cost you about
2.75 times as much in total interest payable if you pay it off over
25 years at 6% than using a car loan over 3 years at 20%. E&OE
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| Re: Northern Rock hides a housing disaster [message #377773 ] |
Mi, 05 April 2006 12:48 |
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> > "Crowley" wrote
> >> Accounts from debt charities indicate that many people are
> >> taking on more debt to pay existing debt. It's a downward spiral.
> >
> Tumbleweed wrote:
> > Why? If you owe on a relatively high interest credit card that you are
> > paying off only slowly if at all, xferring it to cheaper debt is what
you
> > should do.
>
"Ronald Raygun" wrote
> Yes, that's what you should do, but not if you're planning
> to pay it off over the same long term as the rest of the
> cheap debt, otherwise it can become more epensive.
If the level of "expense" is OK for the original
"cheap debt", then surely it should be OK for the extra?
In other words, if you think that the "cheap debt" is
too expensive for the new borrowing, then it must also
be too expensive for the "rest of the cheap debt"!!
"Ronald Raygun" wrote
> Adding the cost of, say, a car to your mortgage will cost you about
> 2.75 times as much in total interest payable if you pay it off over
> 25 years at 6% than using a car loan over 3 years at 20%. E&OE
So - you are suggesting that, if you are buying a £200K
house and a £20K car (say), that you should pay for the
£20K over 3 years at 20% and the £200K over 25 years
at 6%, rather than the total of £220K over 25 years at 6%?
What if, instead, you were buying just a £220K house (& no car)?
Should you still pay back £20K over 3 years at
20% and £200K over 25 years at 6%, or is paying
back £220K over 25 years at 6% now OK?
Does which is "best", depend on what you were buying with the money?
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| Re: Northern Rock hides a housing disaster [message #377775 ] |
Mi, 05 April 2006 14:19 |
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Tim wrote:
> "Ronald Raygun" wrote
>> Adding the cost of, say, a car to your mortgage will cost you about
>> 2.75 times as much in total interest payable if you pay it off over
>> 25 years at 6% than using a car loan over 3 years at 20%. E&OE
>
> So - you are suggesting that, if you are buying a £200K
> house and a £20K car (say), that you should pay for the
> £20K over 3 years at 20% and the £200K over 25 years
> at 6%, rather than the total of £220K over 25 years at 6%?
No, I'm simply pointing out that it would work out cheaper in the long
run to do so, not suggesting that you necessarily *should* do so.
What I'd be inclined to recommend is to put the car on the mortgage,
but then to make accelerated repayments so that after 3 years the
level of debt is down to the same as it would have been had the
car not been bought. In effect, to get the car loan at 6% over
3 years.
> What if, instead, you were buying just a £220K house (& no car)?
> Should you still pay back £20K over 3 years at
> 20% and £200K over 25 years at 6%, or is paying
> back £220K over 25 years at 6% now OK?
No, but you could, say, pay back 20k over 3 years and 200k over
25, but both at 6%.
> Does which is "best", depend on what you were buying with the money?
No, it depends on how much cashflow is available to pour into
the repayments.
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| Re: Northern Rock hides a housing disaster [message #377779 ] |
Mi, 05 April 2006 15:07 |
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Tim wrote:
> What if, instead, you were buying just a £220K house (& no car)?
> Should you still pay back £20K over 3 years at
> 20% and £200K over 25 years at 6%, or is paying
> back £220K over 25 years at 6% now OK?
You should pay it back as quickly as cashflow allows. It isn't a good idea
to have a mortgage and large amounts of savings in the bank.
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| Re: Northern Rock hides a housing disaster [message #377780 ] |
Mi, 05 April 2006 15:12 |
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"Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
news:vzMYf.48207$wl.2134 [at] text.news.blueyonder.co.uk...
> Tumbleweed wrote:
>
>> "Crowley" <crowalas1234 [at] yahoo.co.uk> wrote in message
>> news:1144149992.644690.325330 [at] t31g2000cwb.googlegroups.com...
>>>
>>> Accounts from debt charities indicate that many people are taking on
>>> more debt to pay existing debt. It's a downward spiral.
>>
>> Why? If you owe on a relatively high interest credit card that you are
>> paying off only slowly if at all, xferring it to cheaper debt is what you
>> should do.
>
> Yes, that's what you should do, but not if you're planning to pay it
> off over the same long term as the rest of the cheap debt, otherwise
> it can become more epensive.
>
I thought someone woukld say that,and of course its absolutely true. But my
point is that the simple fact that people are rolling high interest loans
into low interest ones, isnt by itself a cause for concern. By itself, with
no other corroborating evidence, its a sign that people are financially
astute. I suspect that what you say does tend to happen, but the bare facts
as presented don't back up the point that is usually made, about
recklessness.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Northern Rock hides a housing disaster [message #377783 ] |
Mi, 05 April 2006 16:11 |
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Tumbleweed wrote:
> "Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
> news:vzMYf.48207$wl.2134 [at] text.news.blueyonder.co.uk...
>>
>> Yes, that's what you should do, but not if you're planning to pay it
>> off over the same long term as the rest of the cheap debt, otherwise
>> it can become more epensive.
>
> I thought someone woukld say that,and of course its absolutely true. But
> my point is that the simple fact that people are rolling high interest
> loans into low interest ones, isnt by itself a cause for concern.
Agreed, with emphasis on *by itself*.
> By
> itself, with no other corroborating evidence, its a sign that people are
> financially astute.
Not bloody likely.
> I suspect that what you say does tend to happen, but
> the bare facts as presented don't back up the point that is usually made,
> about recklessness.
I think you need to look at it backwards. Most people are financially
uneducated, and thus all too apt to be ushered, nay, herded, into the
position of increasing their long term debt by eager financial "advisers"
keen to flog them re-mortgages.
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| Re: Northern Rock hides a housing disaster [message #377789 ] |
Mi, 05 April 2006 18:17 |
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"Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
news:VdQYf.48296$wl.18763 [at] text.news.blueyonder.co.uk...
>
> I think you need to look at it backwards. Most people are financially
> uneducated, and thus all too apt to be ushered, nay, herded, into the
> position of increasing their long term debt by eager financial "advisers"
> keen to flog them re-mortgages.
>
I dont disagree. But again, just to make the point, a single statistic that
says 'X million of debt from credit cards was xferred to mortgages this
year' doesnt prove anything about recklessness or financial ineptness.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Northern Rock hides a housing disaster [message #377792 ] |
Mi, 05 April 2006 18:46 |
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Tumbleweed wrote:
>
> "Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
> news:VdQYf.48296$wl.18763 [at] text.news.blueyonder.co.uk...
>>
>> I think you need to look at it backwards. Most people are financially
>> uneducated, and thus all too apt to be ushered, nay, herded, into the
>> position of increasing their long term debt by eager financial "advisers"
>> keen to flog them re-mortgages.
>>
> I dont disagree. But again, just to make the point, a single statistic
> that says 'X million of debt from credit cards was xferred to mortgages
> this year' doesnt prove anything about recklessness or financial
> ineptness.
Indeed it doesn't prove that, but instead we take it as given that
ineptness exists, and then the statistic that a lot of debt has
been moved that way becomes worrying.
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| Re: Northern Rock hides a housing disaster [message #377821 ] |
Do, 06 April 2006 13:24 |
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> > "Ronald Raygun" wrote
> >> Adding the cost of, say, a car to your mortgage will cost you about
> >> 2.75 times as much in total interest payable if you pay it off over
> >> 25 years at 6% than using a car loan over 3 years at 20%. E&OE
> >
> "Tim" wrote:
> > So - you are suggesting that, if you are buying a £200K
> > house and a £20K car (say), that you should pay for the
> > £20K over 3 years at 20% and the £200K over 25 years
> > at 6%, rather than the total of £220K over 25 years at 6%?
>
"Ronald Raygun" wrote
> No, I'm simply pointing out that it would
> work out cheaper in the long run to do so...
You need to consider very carefully though,
exactly what you mean by "cheaper"!
For instance, suppose your current salary/wages are
£20Kpa and they will increase at 6%pa in the future.
If you borrowed £20K now at 6%pa interest, then you
would pay back exactly 100% of a year's earnings in total.
That might be 35.3% this year, 33.3% next year and 31.4%
the year after, if you borrowed over 3 years. But even if
you borrowed over 25 years (or even more!), the total
proportions of salary will always add up to 100%.
However - and here's the crunch - if you borrowed over
just 3 years paying 20% interest, then you'd pay back
a total of a lot more than just 100% of a year's salary!!
This shows that you'd end up paying back "one year's salary"
if borrowing at 6% over 25 years, but much more than 100%
if borrowing at 20% over 3 years -- and ">100%" might
be considered **more expensive** than "=100%" !!
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| Re: Northern Rock hides a housing disaster [message #377831 ] |
Do, 06 April 2006 16:30 |
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Tim wrote:
> For instance, suppose your current salary/wages are
> £20Kpa and they will increase at 6%pa in the future.
> If you borrowed £20K now at 6%pa interest, then you
> would pay back exactly 100% of a year's earnings in total.
> That might be 35.3% this year, 33.3% next year and 31.4%
> the year after, if you borrowed over 3 years. But even if
> you borrowed over 25 years (or even more!), the total
> proportions of salary will always add up to 100%.
>
> However - and here's the crunch - if you borrowed over
> just 3 years paying 20% interest, then you'd pay back
> a total of a lot more than just 100% of a year's salary!!
>
> This shows that you'd end up paying back "one year's salary"
> if borrowing at 6% over 25 years, but much more than 100%
> if borrowing at 20% over 3 years -- and ">100%" might
> be considered **more expensive** than "=100%" !!
It's an interesting (no pun intended) way of looking at it.
By measuring cost in terms of salary instead of actual pounds,
you are reducing the interest rate of the long term loan to salary
inflation plus zero (which you could consider to be effectively
a "free" loan). Then the short term rate, at salary inflation
plus some 13.2% [1.20/1.06 = 1.132], will always have, in the same
terms, a positive effective cost.
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| Re: Northern Rock hides a housing disaster [message #377836 ] |
Do, 06 April 2006 17:44 |
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> "Tim" wrote:
> > For instance, suppose your current salary/wages are
> > £20Kpa and they will increase at 6%pa in the future.
> > If you borrowed £20K now at 6%pa interest, then you
> > would pay back exactly 100% of a year's earnings in total.
> > That might be 35.3% this year, 33.3% next year and 31.4%
> > the year after, if you borrowed over 3 years. But even if
> > you borrowed over 25 years (or even more!), the total
> > proportions of salary will always add up to 100%.
> >
> > However - and here's the crunch - if you borrowed over
> > just 3 years paying 20% interest, then you'd pay back
> > a total of a lot more than just 100% of a year's salary!!
> >
> > This shows that you'd end up paying back "one year's salary"
> > if borrowing at 6% over 25 years, but much more than 100%
> > if borrowing at 20% over 3 years -- and ">100%" might
> > be considered **more expensive** than "=100%" !!
>
"Ronald Raygun" wrote
> It's an interesting (no pun intended) way of looking at it.
Oh teehee!
"Ronald Raygun" wrote
> By measuring cost in terms of salary instead of actual pounds,
> you are reducing the interest rate of the long term loan to
> salary inflation plus zero (which you could consider to be
> effectively a "free" loan). Then the short term rate, at
> salary inflation plus some 13.2% [1.20/1.06 = 1.132], will
> always have, in the same terms, a positive effective cost.
Exactly. But even if salary only increased at (say)
4%pa, the comparison is similar - the 'long-term'
loan only "costs" an effective 2-ish%pa, but
the '"short-term' loan "costs" around 15%pa.
Whatever the rate of salary increases, the
lower interest rate loan is "better" even
if the term is lengthened substantially!
Do you still think that taking that
20%pa car loan is good value? ;-)
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| Re: Northern Rock hides a housing disaster [message #377837 ] |
Do, 06 April 2006 18:03 |
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Tim wrote:
> Exactly. But even if salary only increased at (say)
> 4%pa, the comparison is similar - the 'long-term'
> loan only "costs" an effective 2-ish%pa, but
> the '"short-term' loan "costs" around 15%pa.
>
> Whatever the rate of salary increases, the
> lower interest rate loan is "better" even
> if the term is lengthened substantially!
What if we get deflation?
> Do you still think that taking that
> 20%pa car loan is good value? ;-)
It could be. Depends on how long for. Given a pair
of high/low rates, and a duration for the high rate,
one can compute the duration break-even point for the
low rate, beyond which the low rate loan will be more
expensive and below which it will be cheaper. The zero
low rate just moves that point into Buzz Lightyear
territory.
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| Re: Northern Rock hides a housing disaster [message #377843 ] |
Do, 06 April 2006 18:50 |
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> "Tim" wrote:
> > Exactly. But even if salary only increased at (say)
> > 4%pa, the comparison is similar - the 'long-term'
> > loan only "costs" an effective 2-ish%pa, but
> > the '"short-term' loan "costs" around 15%pa.
> >
> > Whatever the rate of salary increases, the
> > lower interest rate loan is "better" even
> > if the term is lengthened substantially!
>
"Ronald Raygun" wrote
> What if we get deflation?
What if the person dies just two years later?
[In which case it would have been much better to pay
2 years of a 25 year loan, than 2 years of a 3 year one!]
There are always unusual occurrences which will change the perspective.
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| Re: Northern Rock hides a housing disaster [message #377847 ] |
Do, 06 April 2006 19:16 |
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In message <hsKdndmfyuxJ26jZRVnyhQ [at] bt.com>, Tim <me [at] home.uk> writes
>> "Tim" wrote:
>> > Exactly. But even if salary only increased at (say)
>> > 4%pa, the comparison is similar - the 'long-term'
>> > loan only "costs" an effective 2-ish%pa, but
>> > the '"short-term' loan "costs" around 15%pa.
>> >
>> > Whatever the rate of salary increases, the
>> > lower interest rate loan is "better" even
>> > if the term is lengthened substantially!
>>
>"Ronald Raygun" wrote
>> What if we get deflation?
>
>What if the person dies just two years later?
>[In which case it would have been much better to pay
>2 years of a 25 year loan, than 2 years of a 3 year one!]
>
Yep! Thats something I always factor into my decision making when buying
something ???
>There are always unusual occurrences which will change the perspective.
--
Richard Faulkner
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| Re: Northern Rock hides a housing disaster [message #377997 ] |
So, 09 April 2006 19:13 |
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"Tim" <me [at] home.uk> wrote in message news:sYKdnZ3snsY3Pa7ZRVnygw [at] bt.com...
> > > "Crowley" wrote
> > >> Accounts from debt charities indicate that many people are
> > >> taking on more debt to pay existing debt. It's a downward spiral.
> > >
> > Tumbleweed wrote:
> > > Why? If you owe on a relatively high interest credit card that you are
> > > paying off only slowly if at all, xferring it to cheaper debt is what
> you
> > > should do.
> >
> "Ronald Raygun" wrote
> > Yes, that's what you should do, but not if you're planning
> > to pay it off over the same long term as the rest of the
> > cheap debt, otherwise it can become more epensive.
>
> If the level of "expense" is OK for the original
> "cheap debt", then surely it should be OK for the extra?
>
> In other words, if you think that the "cheap debt" is
> too expensive for the new borrowing, then it must also
> be too expensive for the "rest of the cheap debt"!!
>
> "Ronald Raygun" wrote
> > Adding the cost of, say, a car to your mortgage will cost you about
> > 2.75 times as much in total interest payable if you pay it off over
> > 25 years at 6% than using a car loan over 3 years at 20%. E&OE
>
> So - you are suggesting that, if you are buying a £200K
> house and a £20K car (say), that you should pay for the
> £20K over 3 years at 20% and the £200K over 25 years
> at 6%, rather than the total of £220K over 25 years at 6%?
>
> What if, instead, you were buying just a £220K house (& no car)?
> Should you still pay back £20K over 3 years at
> 20% and £200K over 25 years at 6%, or is paying
> back £220K over 25 years at 6% now OK?
>
> Does which is "best", depend on what you were buying with the money?
>
Not really Tim - overpaying your mortgage is definitely a good move - your
first example would save quite a few quid in interest.
I have another theory, probably just as worrying... How much MEWing is going
into further property deals rather than cutting down the weekly payments?
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| Re: Northern Rock hides a housing disaster [message #378211 ] |
Mo, 10 April 2006 13:48 |
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> "Tim" wrote
> > So - you are suggesting that, if you are buying a £200K
> > house and a £20K car (say), that you should pay for the
> > £20K over 3 years at 20% and the £200K over 25 years
> > at 6%, rather than the total of £220K over 25 years at 6%?
> >
> > What if, instead, you were buying just a £220K house (& no car)?
> > Should you still pay back £20K over 3 years at
> > 20% and £200K over 25 years at 6%, or is paying
> > back £220K over 25 years at 6% now OK?
> >
> > Does which is "best", depend on what you were buying with the money?
> >
"DaveJ" wrote
> Not really Tim - overpaying your mortgage is definitely a good
> move - your first example would save quite a few quid in interest.
Think again ... overpaying a loan charging 20% would save even
more money than overpaying a mortgage charging only 6% !!
"DaveJ" wrote
> I have another theory, probably just as worrying...
> How much MEWing is going into further property
> deals rather than cutting down the weekly payments?
Weekly?!!
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| Re: Northern Rock hides a housing disaster [message #380012 ] |
Di, 11 April 2006 19:51 |
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"Tim" <me [at] home.uk> wrote in message news:reidnZ3B9PGo26fZRVnyrw [at] bt.com...
> > "Tim" wrote
> > > So - you are suggesting that, if you are buying a £200K
> > > house and a £20K car (say), that you should pay for the
> > > £20K over 3 years at 20% and the £200K over 25 years
> > > at 6%, rather than the total of £220K over 25 years at 6%?
> > >
> > > What if, instead, you were buying just a £220K house (& no car)?
> > > Should you still pay back £20K over 3 years at
> > > 20% and £200K over 25 years at 6%, or is paying
> > > back £220K over 25 years at 6% now OK?
> > >
> > > Does which is "best", depend on what you were buying with the money?
> > >
> "DaveJ" wrote
> > Not really Tim - overpaying your mortgage is definitely a good
> > move - your first example would save quite a few quid in interest.
>
> Think again ... overpaying a loan charging 20% would save even
> more money than overpaying a mortgage charging only 6% !!
>
No thanks - would rather be paying 6% whilst I was overpaying...
> "DaveJ" wrote
> > I have another theory, probably just as worrying...
> > How much MEWing is going into further property
> > deals rather than cutting down the weekly payments?
>
> Weekly?!!
>
Seems to be going that way - houses will be 4.3 times more affordable... LOL
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| Re: Northern Rock hides a housing disaster [message #380085 ] |
Fr, 14 April 2006 15:35 |
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> > > "Tim" wrote
> > > > So - you are suggesting that, if you are buying a £200K
> > > > house and a £20K car (say), that you should pay for the
> > > > £20K over 3 years at 20% and the £200K over 25 years
> > > > at 6%, rather than the total of £220K over 25 years at 6%?
> > > >
> > > > What if, instead, you were buying just a £220K house (& no car)?
> > > > Should you still pay back £20K over 3 years at
> > > > 20% and £200K over 25 years at 6%, or is paying
> > > > back £220K over 25 years at 6% now OK?
> > > >
> > > > Does which is "best", depend on what you were buying with the money?
> > > >
> > "DaveJ" wrote
> > > Not really Tim - overpaying your mortgage is definitely a good
> > > move - your first example would save quite a few quid in interest.
> >
> "Tim" wrote
> > Think again ... overpaying a loan charging 20% would save even
> > more money than overpaying a mortgage charging only 6% !!
> >
"DaveJ" wrote
> No thanks - would rather be paying 6% whilst I was overpaying...
You said "your first example", which involved paying some
interest at 6% and some at 20%. In that scenario, overpaying
the 20% loan is much better than overpaying the 6% mortgage.
If you meant the scenario of having all the debt at the
6% rate, then that was "second example" (not first)...
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| Re: Northern Rock hides a housing disaster [message #380102 ] |
Fr, 14 April 2006 23:03 |
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"Tim" <me [at] home.uk> wrote in message news:vqCdnamN8vvUOKLZRVny3w [at] bt.com...
> > > > "Tim" wrote
> > > > > So - you are suggesting that, if you are buying a £200K
> > > > > house and a £20K car (say), that you should pay for the
> > > > > £20K over 3 years at 20% and the £200K over 25 years
> > > > > at 6%, rather than the total of £220K over 25 years at 6%?
> > > > >
> > > > > What if, instead, you were buying just a £220K house (& no car)?
> > > > > Should you still pay back £20K over 3 years at
> > > > > 20% and £200K over 25 years at 6%, or is paying
> > > > > back £220K over 25 years at 6% now OK?
> > > > >
> > > > > Does which is "best", depend on what you were buying with the
money?
> > > > >
> > > "DaveJ" wrote
> > > > Not really Tim - overpaying your mortgage is definitely a good
> > > > move - your first example would save quite a few quid in interest.
> > >
> > "Tim" wrote
> > > Think again ... overpaying a loan charging 20% would save even
> > > more money than overpaying a mortgage charging only 6% !!
> > >
> "DaveJ" wrote
> > No thanks - would rather be paying 6% whilst I was overpaying...
>
> You said "your first example", which involved paying some
> interest at 6% and some at 20%. In that scenario, overpaying
> the 20% loan is much better than overpaying the 6% mortgage.
>
> If you meant the scenario of having all the debt at the
> 6% rate, then that was "second example" (not first)...
>
Blimey, too much computer-watching, bad for the eyes.
It was taking the house+car over 25 years and overpaying option (as Ronald
suggested), sorry about that.
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