How long a repayment period ?

Many years ago, a borrower, my father, tried to convince lenders of idea of a much longer repayment period. In fact so long that he gave idea name, infinity mortgage. The idea was to pay interest, at whatever actual rate would be, but not to repay capital. Naturally in staid world of banking this fell on deaf ears, and several so called bankers laughed at idea. Eventually he was able to persuade an institution to go ahead with his proposal, and he purchased a house. He is now nearing retirement and still has not paid off mortgage, and continues to pay interest. He is happy with idea that, when we inherit house, we will have to pay off capital, and so are we.

The current position ?

The house is now valued at £280,000. My father’s income is £5,300 per month. And mortgage payment ? The last time we spoke of matter it was mighty sum of £7.92 per month. The capital to be repaid ? The not insignificant amount of £1,900.

Whether your local currency is pounds sterling, euros or dollars, principle is still same. While motivation at time, as a penniless masters student, was to keep every payment down to a minimum, capital repayment would not exactly have broken bank once a few years had gone by. When he reached point of what would have been normal repayment period, and received advice from all and sundry that perhaps he might slip into bank with a bit of loose change, and pay off capital, he declined. He rather liked idea of his infinity mortgage being just that, or at least being with him until his death. In that he will succeed, you know what some of these old folk are like.

© Jenny Barclay

Jenny Barclay majored in math. and economics, and obtained a masters in viability of banking institutions. She is currently studying Spanish in Andalucia, Spain. This article may be reproduced on websites subject to credit being given to the author, and a link to her website.

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