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DireFog t1_jea6zus wrote

Reply to comment by TenDogsInATrenchcoat in Is it normal to pay an extra 66% of a home loan back to your bank? by TenDogsInATrenchcoat

>If you decide to pay back early, you still have to pay 38 years worth of interest.

This part is weird and not normal. Are you sure you read the terms of the loan right? Even for 'predatory' loans I have not heard of this before.

Edit: I am not a mortgage lender so its possible loans like these do exist and I don't know about them. But at a minimum I am confident that this is not the norm.

Edit 2: Apparently is legal in at least some parts of Europe. Y'all be wild in what you are letting lenders do. 😜

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goclimbarock007 t1_jea8gef wrote

Maybe it's a European thing? His currency does use the Euro symbol.

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DireFog t1_jea9j9b wrote

Ah, that's possible, how silly of me to miss that Euro symbol. I think most of this sub defaults to assuming "American financial regulations" unless otherwise specified.

Just logically that seems like a horrible idea though. If you sell your house before the 38 years are up you are automatically deep underwater because you will instantly owe six figures on top of whatever is not paid off yet.

Right?

Seems crazy to me.

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kcrab91 t1_jeadxvz wrote

Has to be. 38 year mortgages aren’t a thing in the US. I believe Japan (not sure) have 50 and 100 year mortgages? That’s just wild.

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BLolo99 t1_jeaj07f wrote

Typical mortgage in Japan is 35 years. Those 50+ year mortgages are few and far between here - reserved for special situations.

And the banks here require a term life insurance plan paid up front to secure the mortgage too if you die before paying it off. Japan banks have zero risk tolerance.

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[deleted] t1_jeamwc0 wrote

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BLolo99 t1_jeaoobn wrote

It’s different because housing value tends to increase in the US, so the property can be sold off and the loan satisfied if needed. In Japan, outside of central Tokyo and a few other locations, housing value goes down not up over time.

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Jmen4Ever t1_jeamdlf wrote

My dad was offered a 50 year mortgage when he purchased his current condo. (Midwest US in the early 2000s.

Note he was 65 at the time.

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[deleted] t1_jea9jeh wrote

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DireFog t1_jeaaubi wrote

>Due to the OP using the € I think they aren't playing by US rules at all.

Yes, I am a silly American and did miss that, thanks for catching and good explanation.

I am a bit horrified by how bad this sounds though. If u/TenDogsInATrenchcoat were to take this loan and try to sell their house before 38 years they would instantly owe six figures on top of the principle and be completely screwed, right?

Is it fair to say that this is a bad deal by European standards as well and OP should flip their lender the middle finger and do something else then?

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TenDogsInATrenchcoat OP t1_jeab96l wrote

Based on the comments I have decided to flip both middle fingers to this bank and look elsewhere. Thank you all for your help!

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nantuech t1_jeafu3z wrote

>is it fair to say that this is a bad deal by European standards?

Yes. Absolutely.

OP used the Euro symbol, so it may come from a country from the Euro zone. I didn't see more info about the country.

I can't talk for each specific country obviously. But a 38 years loan isn't the norm in a lot of euro countries (more like 20 or 25 max. Can go up to 30 in very specific circumstances). More importantly : the fact that the huge interests are due even with an anticipated reimbursement.

It's the case in my country (in the Euro zone) and very probably in all other euro zone countries : loans can be renegociated, in length and rates. Conditions of the renegociation can be specific to the loan/country (i.e. there may be a cost for the renegociation, that cost can be significant). Given the current level of interest rates, I would be very careful about the possibility of renegociating, and its cost. As there is a chance that interests rates will fall down again in 5,10 or 15 years, which considering OP's time-line would still be early

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