Gutting the mortgage.

One of the greatest unsolved mysteries of criminology English was the identity of the famous Jack The Ripper, and that among the suspects we find members of the British royal family, the doctor of Queen Victoria, a young lawyer, a businessman Liverpool, a Jew and a psychotic impressionist painter.

Fortunately, 6 years ago the writer of mystery novels by Patricia Cornwell, did not have anything else to do and gave to invest $ 4 million to reach the conclusion that the notorious murderer was Walter Richard Sickert, 28, a prestigious painter of the time.

Patricia, had the patience to buy up to 30 paintings of the artist and analyze them in search of traces of DNA but is not that painting is a good preservative. However, the writer did not give up and finally after much searching, found him in a letter from his wife (you know, never utilicéis language for hitting an envelope) that matched the genetic material of the murderer.

Without doubt, Jack was a guy who liked to go to parties and blog we have here in our professional Ripper, whose victim today, is the mortgage. So I switch to the article written by Oriol.

Today I wish to comment on how the shares of a mortgage to take a little awareness of the pros and cons of the government's proposal to help the unemployed, postponing for two years for 50% of the share mortgage.

The mortgage is a repayment of capital. Each payment is decomposed in a part of a separate interest and repayment of the nominal. We must be clear that each share will be paid interest on which is due during the last period. Nor on what is paid this month, not on the original debt. The structure of the payments may have several forms, but I will focus on two, the simplest and most common, and this will put an example with the following information:

Capital: 180,000 €
Fees: 360 (30)
Interest: 5% (we assume fixed interest, because it is conceptually the same)
Monthly interest: 0.416667%

1 .- Amortization of capital

This system is not used regularly but is the most simple and will help us see clearly how it accrues interest. In this case, the party repaid at each share is constant, so the duty less and less money, every time there is less interest burden and the share is decreasing.

In the period "0" give us the money, so there are outstanding 180,000 €.

In the period "1" we pay the first installment. The amortized in the share capital is € 500 (180.000/360) and interest are due to have cost € 180,000 over a period (one month in our case), with an annual rate of 5% (which would be the monthly 0.41667%. Interest is then 750 € (180,000 x 0.0041667). After paying the first fee of 1250 € (500 +750 = capital + interest) I have € 179,500 to the bank, so that the interests of the following share were calculated on this new amount of debt. 747.92 (slightly less than before because I have less), then the fee is € 1247.92 in (capital + interest) and so on. (See table)

Observe that in recent assessments, the interest is very low, as they are, for example in the past, due to be € 500 a month. The shares were also lower for the same reason.

2 .- quota steady or French system.

First, argue that the name had nothing to do with negotiating the differential carried out under the table. Is the most common, where the monthly fee to pay is constant, then, bearing in mind the statement I gave to the principle that "in each period are paid interest on the total that had been due during the last period," we see amortization of capital should be variable over the life of the operation so that in each period, capital + interest, is a constant. To meet this "magic number" that meets these assumptions, it applies the following formula: (Excel has incorporated the role as "payment")

If we apply this formula to the previous case, we will see that the fee payable for the lifetime of the transaction, will be € 966.28

In the period "0" give us the money, so there are outstanding 180,000 €.

When you reach the period "1", the first thing that will "pay" are those interests, 750 € (180,000 x 0.0041667), and by difference, we took that capital will be repaid € 216.28 (966.28 - 750), and so on. Are calculated interest earned that month (which is due by the monthly interest) and what gives, is subtracted from the share capital to hear that I'm retiring on each share. At the start is something as well:

As you can see, the retired capital is higher in each period, because as I have ever fewer, ever pay less interest, and as the quota should be constant, amortizaré more and more capital, until in the final assessments was almost all capital .

Since we are, argue that the gaps (which would be tantamount to paying the mortgage with infinite time) on this mortgage would be a quota of 750, which would correspond to pay only the interest generated by the 180,000 € and without anything to amortize capital. Besides, for those who believe that extending deadlines is the solution to everything, notes that even though the deadline alargásemos (35, 40, 50 or unlimited years), the quota could never be less than 750 €, because of pay least, we would be accumulating new debt by not covering the interest.

And right at this point is lame in aid proposed by the government. Take the example of reference, and that you pay and left him unemployed leading 24 catches fees (2 years).

Let's see what happens if the mortgaged pays half the mortgage share, and does not cover the interest.

A) If the difference is paid by the state can pass two things:

To be kept the same term of the mortgage, which will be 312 months (360-48) to repay the € 174552.82 to be at the beginning of the period of deferment, so it would be a quota of 1000.79 €
You live long term of the mortgage 2 years, bringing the share will continue to € 966.28 but end up being paid to the 32 years of the start of the mortgage.

B) If this difference is assumed by the state, but that will accrue as debt, we see that once the deferral should be more than at the beginning of the mortgage: 180702.30

In this case we also found two possible scenarios:

The deadline to keep him engaged, with what he has to pay € 180702.30 quotas on 312, which is a fee of € 1036.05
You live long term of the mortgage 2 years, bringing the share would be € 1000.32 but end up paying at 32 years of the start of the mortgage

Then I come to mind several questions:

Do you think that members of the government announcing these measures have been raised these issues? I would like to think so.
Who will assume the interests not covered by paying only half the share mortgage? Are the banks as a good Samaritan? Do mortgaged "desamortizando 'already amortizing capital? Does the state with money for everyone?
If the state assumes the cost of unpaid interest of the people who pay more interest on share huh are incurring moral hazard blatant? What will the next generation when you see who helps the state?

Written by Oriol Carlos and the November 10, 2008 with 269 points.
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# 1, Carlos Lopez

November 10, 2008, at 9:20.

Summary: press

- Santander broad 7194.65 million in capital with 46% premium to shareholders
- Banks and boxes come in studying the merits of block liquidity to prevent a deterioration of its image
- Zapatero announces measures for SMEs and noted that "not worth warm cloths"
- 'No help the real estate does not come out of the crisis'
- China adopts a macroplan rescue: 600.000 million dollars
- The change that needs to Spain
- Outlook Negative: up to eight savings banks are close to junk bond rating of
- The sovereign funds lost 553,000 million in failed investments

# 2, A Canary

November 10, 2008, at 9:27.

My job is in an astrophysical observatory at La Palma, is one of the cleaner skies over the planet, here are working Norwegians, Danes, Dutch, Germans, Belgians and a few Spaniards, when we came together is wonderful to see the speed at which we find a language where we all understand, because language is simply to understand it myself. The fact is that I study English and German, and I learned French.
I said before that I do not care to learn Catalan, a language always gives you something, (we regret when we travel).
I think that one should not join a language to make homelands, because in the end lose out, not locally but in a comprehensive way if

-26

# 3, Carlos Lopez

November 10, 2008, at 9:31.

I beg to leave the discussion of the weekend (nationalism, etc.) for another day and get involved in economic issues is more himself on Monday.

+33

# 4, Key

November 10, 2008, at 9:32.

I also would like to think that I have raised all these things before you take a measure to defer part of the mortgage for the unemployed ... but now that I have read the post I get to my not ...

Baton of the Day: 4521%

Good morning everyone!

# 5, droblo

November 10, 2008, at 9:32.

Great article very useful for all who have mortgages and also demsonta the alleged "social action" of the extension of the mortgage, I see more benefits to banks as the mortgage.

Indeed, the extended SANTANDER capital, something that was anticipated for weeks when it opted to buy the SOVEREIGN and then refused ... still no TRANSPARENCY

+28

# 6, Purification

November 10, 2008, at 9:32.

# 2, A Canary

I think enough has already been the weekend to sterile debates on immigration and nationalism. I do not think it has anything to do with the forum.

+11

# 7, A Canary

November 10, 2008, at 9:35.

ok, sorry

+79

# 8, Solbes ruin zp unions

November 10, 2008, at 9:38.

very good comment from the oriole today.
BE stopped this government to think about the numbers?

q There are already some 700asesores, could pagerle 1 day's salary to Oriole q is the explanation for all estos700y PCO and the ministers and zp?
a greeting.

4.50% baton Euribor

# 9, Murdok

November 10, 2008, at 9:39.

I think the government should have imposed on banks the "freezing" of the mortgages of those who remain unemployed, that is, those who do not pay your mortgage two years and was extended in 2 years with the same conditions as if those two years had not existed. That in exchange for all the aid that they are giving banks, such as that of the 100,000 that guarantees the state for two years they are going to do a lot of people do not remove their money from the bank and can continue taking profits with the .

On the other hand it is shown that some loan sharks are lowered when the tipons of interest and spend several days until the rebate is reflected in its entirety in the interbank, if it had been a rise in rates, in a single day would have been reflected completely.

+58

# 10, Poor Hablador

November 10, 2008, at 9:41.

This already commented a few days ago when he left the news of the discount of 50% share. If the state paid rioja hurt other citizens, if they stopped paying the mortgaged it will hurt him because it will have to pay more interest.

I think the best solution is that it pays the mortgaged for it is its debt, but you do not have to pay extra interest. I raised the idea is to finance the 50% who do not pay with a loan to ICO + 0% CPI rise in interest after 2 years, bringing to the top pay all the mortgaged stopped but then returned this money without the bank has to bleed interests.

+11

# 11, mold-jojo

November 10, 2008, at 9:44.

For supuestísimo that banks will charge interest on its money.
For supuestísimo that we are going to pay the mortgage.
For supuestísimo that the government remains silent, gives money to banks and see if in three semanitas, or mesecitos or Anita (as much) escampa.

# 12, Dr. Evil

November 10, 2008, at 9:45.

I have no doubt that the president's advisers, Solbes, Miguel Sebastian and anyone with some economic wisdom know the extent of these measures and their consequences, but following in a line of populist government that we sell "to the people" waiting that the masses will be happy in their ignorance.
The best part is that the masses think they are doing something for them, if only trying to save the banking so you do not have to supply unpaid. For his post the invoice to pay back the working classes (and mortgaged in this case).
Unfortunately journalists do not have the slightest ability to analyze and will believe anything they cuentesn.
So we will

+36

# 13, Kane

November 10, 2008, at 9:46.

I remember that when I read the news that alone would pay 500 euros during the 2 following years, was with the proviso that when they met the 2 years had to deal with the expense.

Bone to move to 2 years will have to pay the mortgaged to tocateja everything that I paid (plus accrued interest as it stopped paying). What is not is how will this. For if the guy could not pay and therefore under the 500 euros, then as hell going to pay everything at once. I guess it is what we should join, which then pay more when it is anchored to this law.

# 14, roger

November 10, 2008, at 9:46.

If you want to save:
Driving at 110 km / h instead of 130km / h: ahorraréis up to € 3 per tank, and also contaminaréis 20% less.
Greetings!

+65

# 15, Kane

November 10, 2008, at 9:47.

# 8, Solbes ruin zp unions

Or if you do not have raised that releasing these 700 people, because they go cloth.

# 16, American

November 10, 2008, at 9:49.

good days
In recent times real estate transactions have been reduced, as we say, only 60% of those made in previous years. But would I buy?
It seems that they do real estate investment trusts ... ... I leave with you a story that appeared in today's Vanguard:

http://www.lavanguardia.es/lv24h/20081110/53575798953.html

it seems that the movement in the sector will suffer another break.
A greeting

# 17, Suina solbess zp unions

November 10, 2008, at 9:50.

because if, insurance and salaries have q millionaires. whether the fire may be used to pay part of those interests taste vampires q, q say the banks.

-6

# 18, Murdok

November 10, 2008, at 9:50.

# 14, roger

If you want to save not cojais the car, ahorrareis all a deposit and contaminareis also 100% less

+83

# 19, roger

November 10, 2008, at 9:54.

100% agree Murdok!

+15

# 20, Mr. T

November 10, 2008, at 9:55.

# 18, Murdok

Why do not you shut up crazy?

-22

# 21, Italian

November 10, 2008, at 9:57.

I had understood that government assistance would ipotecar of up to 170,000 Euros. In your example is estimated about 174,900 Euros capital residue ...

-5

# 22, Murdok

November 10, 2008, at 9:57.

# 20, Mr. T

Jajaja, tapeworms have been placed MA

-1

# 23, Anuska

November 10, 2008, at 9:58.

The problem of mortgages is that you can not prosecute a single one. Each case is different from unpaid mortgages. There are the typical couple who bought a flat with all the excitement of the world and calculating well and then when you are staying unemployed him came the problems, others that after calling a mortgage beyond its means now you can not cope or those who have wanted to have a house according to their ability but who have lived as "rich" (travel, jewelry, going to restaurants every weekend ...) and now they have gone up the quota and who have remained unemployed no longer can afford it, etc ...

Who help ????? It is clear that banks are not going to lose (also live off the interest they charge) and if the state loses, we lose all. I acknowledge to be selfish but I do not think it is fair that those who have fought for a home, to lose its share of mortgage or for trying to pay rent, faced with economic problems because they have risen so much taxes and the cost of the house. . who can not cope. And for what? to help many (not all) that their excesses are now in trouble and that at the time coming out of the muck, back to do exactly the same.

+38

# 24, droblo

November 10, 2008, at 9:58.

According JLM Campuzano (strategist at Citigroup published on the website of Carpathian), these are the steps that China took this weekend and have liked it to the bags:

An economic stimulus package in two years by more than 600 bn. $, Representing a 13% growth for China in 2009. And they are to government figures, who shuffled a growth of between 8-9% next year. What would have been without this economic injection? The package is divided into 10 areas:

* Construction of housing for low-income
* Structure of basic services (gas, electricity and water) in rural areas
* Transport infrastructure
* Health and education
* Environmental Protection
* Technological innovation
* Reconstruction after the earthquake this year
* To increase the disposable income in the countryside and city
* Reform tax
* Increase funding for private investment

PERSONALLY, I drew attention to the last point ... now they say that countries become liberal socialist theory is that the communist country is increasing funding for private investment ... is something like when Switzerland (a country with no sea) won the Copa America ...

is good that the world is not as predictable

+33

# 25, Purification

November 10, 2008, at 9:58.

# 13, Kane

You will not have to pay for two years all at once, but will be assessed in 10 years.

It seems to me a somewhat lame, but I think it will be valid in many cases. Logically, this should not have cost to the state, the interests must assume the mortgage. That at the end of two years, the amount not paid (capital + interest) will join the principal outstanding.

On aid to banks, prefer to break the financial system? Do we imagine what it would mean for our economy?

# 26, Mr T

November 10, 2008, at 9:58.

Yes, and your Murdock jeje ... .... (I think ....)

-4

# 27, pitumadefaca@gmail.com

November 10, 2008, at 9:59.

I think it has ignored the economic consequences of a two-year postponement of mortgage payments of the unemployed.

On the other hand, if the state to pay such interest, would increase the núemro unemployed so artificial, because it would be an advantage improtante.

Because if a person is going to strike, it keeps the basis of trading during these two years and there are many people who would have no problems in maintaining the incomes of how "informal" during this time.

Suppose that the cost of a company employee is € 40,000 gross salary of € 11,000 + cost social security company. Are € 4250 per month .... If one is unemployed € 11,000 left to pay ... and received about 900 € ... if you also "subsidize" 50% of the mortgage (with a maximum of € 170,000 would be talking about 450 €) .... . everyone makes their numbers ...

This case is one that gloss over the difficulty in making decisions that may macroeconomic to please everybody and be fair ... in an environment fundamentally unfair ...

# 28, Murdok

November 10, 2008, at 10:01.

# 23, Anuska

Totally agree, is more, I have a colleague who got the SUV in the mortgage and a couple of months ago he went to Punta Cana or 3 months when there had previously been to the Caribbean honeymoon, of course bodorrio for everything high at the moment can pay their 1300 € mortgage, but if one day you can not sorry, that would have thought with his head.

+36

# 29, Fran Diaz

November 10, 2008, at 10:03.

To me it seems to me an attempt to sdólo a few, will have no results. I do not think it is correct that the state party endorsement of the mortgage front of a bank.

What I think is correct that the State will become the bank, in exceptional conditions, and to pay the outstanding capital at current bank, and providing liquidity and re-operate the system. And the people so happy, with a mortgage against an "Official Mortgage Institute" (such as ICO), in a better position.

Total assets of "high quality" that are going to buy the banks, is also available to individuals have not you?

Greetings!

+22

# 30, Murdok

November 10, 2008, at 10:04.

# 26, Mr T

If it is with Ck, but I'm only a madman (and there are many Murdock, so you remove the c, and that's why the pq c I like less, jeje).

-11

# 31, Anonymous

November 10, 2008, at 10:05.

Good morning to all, has long wanted to say that lately you hear a lot of Bulo topic that runs through there and the thing is, "like you can not pay the mortgage was at the bank and left him the keys ..."
Let's see, the bank you can leave the keys, the budgie or dirty socks, because the bank left you want MONEY MONEY and no keys. You have a debt contracted by x time with a monthly fee so that's what you owe, the bank will take your house to arrest and if the auction to cover what you owe, and whether or not covered because you pay it missing and you will be no floor, so it works.

+40

# 32, pirdi

November 10, 2008, at 10:06.

Hello everyone:
One thing I do not understand. Most mortgages are for the French system, the share is explicais cte. But then why is moving in each revision Euribor?, is no longer cte. How does it affect the capital outstanding?. Speaking sunken pit in my ignorance I think that explanation is incorrecta.No know. is beyond me something.

A greeting to all

-1

# 33, JAC

November 10, 2008, at 10:07.

# 31, Anonymous

Do not forget the "payment in kind", although little, too there.

# 34, Mr T

November 10, 2008, at 10:07.

# 30, Murdok

Well, I find most of the All-crazy ....

-2

# 35, sogoben@terra.es

November 10, 2008, at 10:09.

We also wanted to say that the crisis has not come yet, because now people are becoming unemployed, but most will charge a couple of years, the problem will come when the strike ends and we do not have work because there is nothing, cookies will come from tip.
Ostias will divide up in hell. At the time.

# 36, Dr. Evil

November 10, 2008, at 10:09.

Pirdi,
The starting point of the exhibition was that the rate was fixed at 5%, if the Euribor variable, then the column of interest to be recalculated based on the type that you apply to your revisions exposure would be less clear, but conceptually would be the same.

+16

# 37, One More

November 10, 2008, at 10:09.

I liked that about "... the negotiation of differential carried out under the table." When the differential negotiate with the bank gives the impression that you're prostituting themselves by lowering a miserable tenth that differential. And then it seems that you are doing you a favor.

+13

# 38, Anonymous

November 10, 2008, at 10:10.

Well, I look around me and not a single person of my surroundings (Madrid) has a mortgage of less than 170,000 euros ...

+29

# 39, droblo

November 10, 2008, at 10:10.

25 purification, so I agree the system receives financial aid but has done very badly:
-First has helped the banks rather than citizens. Wrong.
Second, they have not demanded anything in return for aid, aid that if we have to heed their results do not need at all, then it is absurd or the banks or give it and its results are lying in boxes ...
-Third, some measures are so foolish as to buy debt of good quality, if that is no problem placing it.
Fourth, what is abssurdo is to offer aid to a bank to buy what nobody wants in the UK and USA, gives some fantastic results, and then distributes dividend should increase capital ... aid should be only for some and not for everyone and change something that is obvious ...
And no Queiro gives the RMAs coñazo with this, not going anywhere, but to summarize it is one thing to help the financial system and help more than other citizens and do so without offsets.

+49

# 40, curious

November 10, 2008, at 10:11.

baton 4.492 ...

Well, I think that, as before, until we implement everything we have promised you can spend an eternity (or two crises more!)

So I'm sure you have not seen a milk, as when longer periods as a magic solution to the problem ...

A lot of noise and few Pelas!

# 41, Purification

November 10, 2008, at 10:13.

# 39, droblo

I think it years ago that governments (not only in Spain) does not govern for the people.

+28

# 42, Alvy

November 10, 2008, at 10:16.

This government, like most governments, has not stopped to make numbers.
Clearly.
It's simply push the problem until the next elections with few words and good (and bad) shares.

+17

# 43, hipotecaohastalamedula

November 10, 2008, at 10:17.

Political parties are a salary rise 4.2%.

Sure that these people look for the good of the economy?

Salary austerity plan, freeze wages to civil servants, and 3,600 amendments to the general budgets of the state, it occurred to anyone not climb the salary by 4.2%, 1.5% more than the CPI?

And this has nothing to do with PP, PSOE and IU, everyone agrees on this, sends balls ...

Meanwhile the strike of 90,000 at 90,000 every month, we could not send any of them to unemployment?

Here I leave with you the link to the news,

http://www.elmundo.es/elmundo/2008/11/10/espana/1226289313.html

I glad I have the week we go ...

+35

# 44, mercu3

November 10, 2008, at 10:18.

I honestly, I feel much more intelligent solution raised by # 29 Frank Diaz, which raised by ZP & Co.

# 45, Alvy

November 10, 2008, at 10:20.

# 32, pirdi

Share is constant if the interest is fixed.
If it is variable, the share is constant only in each review period.

# 46, Pablo

November 10, 2008, at 10:22.

# 38, Anonymous

Totally agree with you. And I soon expose a reflection ... Most people who are staying stop is young people, that if you have the mortgage are recent. How much of this people has a mortgage below 170,000 €? I do not think honestly it reaches 10%.

It seems to me that of all the anti-crisis of this government is pure demagogy. We want to deceive as stupid. What ZP said that € 170,000 is below the mortgage sectarian half I think, is a waste, because this mortgage is ideally taking into account the people who are finalizing pay and does not take into account that people at risk of losing their jobs has increased by mortgages that amount.

+19

# 47, droblo

November 10, 2008, at 10:25.

Purification 41,
something that is very common excuse for not protesting if it is unfair ... so is corruption, waste and so on. but we must not settle, do not you think?

+10

# 48, BGVC

November 10, 2008, at 10:29.

I was watching TV this morning a3, in which he was leaving a estrevista the minister of housing that left me amazed. You may ask .. because they gave me the feeling that at all times be 100% knew what you were going to ask and what they had to respond .. we got the roll of the houses that had fallen a very high percentage .. LIE. Now that the rents were much more adsequibles a few years ago LIE .. .. That is not that of aid and facilities to do so LIE .. .. That the builders had to earn less money and that they were already in it .. Still more .. MENTIRA won more and closed but the company and point ... I do not understand how you can have both roll to just say LIES ..

+39

# 49, Purification

November 10, 2008, at 10:34.

# 47, droblo

I do not think we need to tell you that I agree with you, simply expressing what I feel.

# 50, Davide

November 10, 2008, at 10:35.

Hello everybody,

I think we give actual data on specific situations and near true help us see the reality around us.
I have a friend who is director of a branch at the expense of a large Spanish bank, well have been wanting to make two specific questions, and this was what he replied:

1 - What happens to one if it can not pay and decides to hand over the keys?
I talked about three cases in recent months in which three families handed over the keys and they grabbed him, (under his responsibility and creterio) people who were too drowned. For in those cases in which the bank takes the keys voluntarily and amicably, took ALL the dogs from the "sale", ie, it is as if the "sell the bank" and you stay free from blame.

2 - What about the English people who bought houses in the southeast near the golf course and have the keys, "Are they can pursue in England?

The answer was no, a Spanish bank can not "put hands" on an English in your country, come on, if not amicably settled as the previous cases, it is eaten with potatoes. (then to auction and, in theory, worth less than the debt)

Greetings.

+16

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