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The practice of securing property for payment of money in English law dates back to Anglo-Saxon England. The word mortgage is of French origin and translated as dead pledge, because the peasant class are expected to work themselves to death trying to pay off their mortgages.
Historically the lender kept the deeds to the property until the debt is fully repaid by the borrower, these days the borrower gets to pretend that the property is theirs but the lender can rob it back off them if the borrower fails to keep up repayments.
Up until the 1980s the mortgage was an obscure financial mechanism unfamiliar to the majority of common people on the street.
Mortgages became big business in the early 1980s when the neo-conservatives came to power in the US and the UK. Margaret Thatcher, Ronald Regan and their cabal of evil capitalists devised the "home owner revolution" as a way of subjugating the working masses into bonded servitude.
edit How it works
The peasant masses are conned into taking out mortgages with phrases like the "home owner revolution" and the "democratisation of property ownership", making it seem that it is only abnormal peasants that would not to aspire to own their own home.
Making people think like this was achieved through two methods, the first being the development of property propaganda and the second was through a jealousy and one-upmanship scheme called right-to-buy.
edit Property fetishisation
The fetishisation of property ownership began in the 1980s with the production of a number of propaganda broadcasts called DIY TV. At first only a few hours a week of this shameless property ownership propaganda was broadcast but soon the genre had spread across all TV channels to create a constant barrage of property programmes.
By the 21st Century the genre had developed to such a level that there were even several channels specifically dedicated to the subject of property development. Popular property shows include How to be a Property Spiv on Channel 5, Kirstie Allsop's Property Porn on Channel 4, and the BBC's House Prices Can Only Go Up.
The general idea behind these programmes is to make the house seem like more than just a load of bricks and other stuff piled together to keep the wind and rain out. The objective is to make the average peasant believe that property is a wise investment, a status symbol and a constructive hobby, and that they should spend most of their time thinking about the value of their house, rather than on how to overthrow the evil and corrupt capitalist system.
The right-to-buy scheme was a genius invention, not only did it make people with upper class pretentions desperately want to buy a house because even people they had been trained to think of as feckless, lower class, council house "scum" were taking out mortgages in order to obtain property. Right-to- Buy also destroyed Britain's ability to provide affordable social housing to the needy for generations, entirely in keeping with the Tory motto of take from the poor and give to the rich.
edit Housing act 1988
Take up of mortgages grew through the 1980s, but the economic recession created by the Thatcher Junta giving away all of the nations assets to their mates caused huge interest rate rises, massively inflating peoples mortgage repayments and scaring many people out of lumbering themselves with an expensive "death pledge".
Thatcher decided that the only way to force people into the slavery of paying off a mortgage was to make the alternative even more scary, so she introduced the 1988 Housing Act to abolish security of tenure for tenants, giving private landlords power to evict tenants more easily and return the UK to "the good old days" of landed gentry renting shit houses to transitory peasant scum. The only way for "peasant scum" to escape the misery of renting shit houses, with no security of tenure from virtually unregulated landlords would be through shackling themselves with a thirty year debt.
edit Types of mortgage
edit Joint Income
Often referred to as a BDS Become Debt Slaves or a WGTYC Wave Goodbye To Your Children.
One day some bankers sat around a table scratching their heads brainstorming ideas about how they could increase the amount of mortgage interest they make. The Joint Income mortgage is what they came up with. They realised that lots of women would be prepared to spend long hours at work and never see their children so they could be surrounded by piles of bricks that they thought were worth more money. It led to a boom in house prices and bankers have indeed been raking in the profits as mortgages have shot up, so of course has the mortgage interest. Just as the bankers hoped, women do not realise that if they stuck to sole income mortgages, the family would have less debt to service and so the second income would be retained by the family instead of going to a banker's bonus via increased mortgage interest. Lots of women wail about childcare costs and never seeing their children but they don't realise it is their own fault, for signing the joint income mortgage form, unlike their mothers who stayed at home and looked after them when they were children. (recommended in UK)
edit Fixed rate
At a fixed rate of interest repayment on your debt you will be OK if the economy collapses completely, but you will make unnecessary losses if the economy thrives. (recommended in Zimbabwe, Weimar Germany)
edit Variable rate
The interest on your debt tracks a set amount above the rate of inflation, if the economy collapses you will be fucked, if it thrives or the government buggers about with the economy by doing stuff like holding interest rates at an artificially low level as they simultaneously print loads of "extra" money you will be alright. (recommended in China, UK, USA)
This historic type of mortgage was sold to over optimistic idiots in the 1980s and early 1990s. The idea was to repay only the interest on the mortgage and put the rest in an investment fund that would eventually build up to be used to pay off the whole mortgage at the end of the agreement and provide a cash surplus. The vast majority of endowment policies actually created a cash shortfall. Any idiot should be able to see that gradually paying off the debt yourself is preferable to lending the money to a load of stockbrokers to gamble with for a couple of decades, hoping that what is left at the end is enough to cover what you owe. (recommended to idiots)
125% mortgages were an invention designed to artificially increase a bank's lending. The reason this was necessary is that the boards of directors of several banks such as Northern Wreck and Bradford and Bingo set up bonus schemes for themselves whereby every 1% increase in the bank's lending would give them 10% of their salary in bonuses. They then instructed their employees to lend as much as possible to anyone they could find and raked in their huge bonuses. There were forseeable consequences to such reckless lending, for more details see the Sub-prime section. (recommended to nobody, no longer available)
edit Self cert
Self cert mortgages were another method for a bank to increase their exposure in order to generate executive bonuses. These required no checks into the ability of the borrower to repay the loan, simply fill out a few lies on form and the £100,000+ loan was yours. (recommended to liars)
Buy-to-let mortgages were invented in the mid 1990s as a way for unscrupulous bastards to live like parasites off the labour of other people. The buy-to-let slumlord would get a mortgage on a house and get some other poor sod to rent the house and use the rental income to pay off the mortgage. Once the buy-to-let parasite has one property they can use it as collateral to obtain a whole portfolio of other properties. They can then live the life of Riley, not even having to work for a living while the poor sods that rent the squalid houses pay off the mortgages. (recommended to greedy, amoral, selfish, whiney and self-righteous bastards)
edit Mortgage Terms
In the past mortgage terms were for a maximum of 25 years.
Now banks have decided to "help" buyers by extending mortgage terms. The gubbermints ponzi housing schemes like Newbuy and Firstbuy encourage people to take out 35 year mortgages. These debt slaves sentence other free people to a life of debt by helping to prop up house prices.
Taking out a longer mortgage for something you cannot really afford to buy, is the way to a life of debt slavery. All so that bankers can make more bonuses and house builders can charge more for their inferior little slave boxes. The strange thing is if that more people refused to take out 35 year mortgages and refused to buy at current high prices.... well they wouldn't have to. Prices would drop and so long mortgages wouldn't be necessary.
Remember when the government offers deposits to "help" first time buyers, it is your money they are using. The government doesn't have any money of it's own, all it has is the taxes it takes from you. Renters are seeing their own taxes used to price them out of buying a house.
edit The sub-prime crisis
The sub prime crisis came about after banks rushed to give hundreds of billions of pounds worth of mortgages to poor people who wouldn't have a chance of ever actually paying back the debt. The banks believed that since property prices could only ever go up, if the borrower defaulted the repossessed house would be worth more than the debt. When house prices began to fall some of the most recklessly overextended banks shat themselves and went whimpering to the government for hundreds of billions of pounds in order to write off all the toxic sub-prime mortgages.
Once bankers began to recognise that their contemporaries were in the same hopeless financial mess that they were in, they stopped lending money to other each other causing the credit crunch. The government then caved in and gave the banks hundreds of billions of pounds to write off all their toxic debt.
Once all the money in the world had been used to pay off these debts, the governments had to find another way to keep the global economy running. The way they did this was to turn themselves into the biggest bunch of money launderers in history with a money printing scheme called "quantitative easing".