Well err yes, interest only mortgages. Thought they would be seen historically in a similar light as sub prime mortgages.
But a readers comment on FT Alphaville set me thinking as they suggested that actually interest only mortgages is effectively cheaper than renting but with greater rights than a normal tenant.
Novel way of looking at it I thought.
Being alarmed that the only way a first time buyer could buy a house in the infamous 2008 was to get an interest only mortgage, worry being, how would you ever pay off the equity.
I'm now seeing the way forward then, it's a kind of renting.
Guess there are no new entrants to that bandwagon now though as Banks are insisting on massive deposits for any loans.
But those already in this in betweenie group i.e. "owner renters" are actually in a good position in that it is cheaper than renting.
Slight drawbacks then:
- negative equity, mitigation being, just walk away at some point. But what is at risk is any deposit you may have put in the house
- propery repairs and maintenance, you don't have to pay those if you rent
- interest rate rises could blow you out but rates are not going up whilst the economy is in the doldrums.
- have to move house, well that may crystalise your loss and you won't get another mortgage
Otherwise, owner renters should just sit tight and enjoy being cheaper than renting.
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