Sunday, Mar 18, 2007
"Imaginative ways to get on the property ladder"
Guardian: Could You Handle an Extreme Mortgage?
Chrystal Fenwick is 18 and Daniel Barry is 19 - and they've signed up for a 40-year 100% mortgage so they can clamber on to the property ladder."We felt renting would be a waste of money so we wanted a mortgage and our own place as soon as possible," says Chrystal.
What made the offer affordable for Daniel and Chrystal was the decision to take the mortgage over a 40-year term instead of the normal 25 years.
"Over 25 years, our repayments would have been nearly £732 a month and that was just too much to cope with," Chrystal says. "Over 40 years, our monthly repayments dropped down to £618 and we felt that, being so young, it would be more manageable. We're managing comfortably, it just means no more new clothes and shoes for me for a while!"
23 Comments
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1. lvmreader said...
Utter madness! Utter, utter stupidity.
What is the effective difference between a 40yr mortgage and rent?
We need retrospective action on any journalists and other VIs who reported on mortgages (bound until death) as if they were the only way to live for their own purposes.
2. japanese uncle said...
The difference is that rent will not treble, while monthly mortgage repayment can.
3. Tangara said...
Who was claiming that "UK has no Subprime Mortgage problem" ? :)
Humm, all this smell good bubble !
Bulls, always forget the risky side of their moves...
4. harold said...
"it just means no more new clothes and shoes for me for a while"
I think she means "it just means no more new clothes and shoes for me ever".
5. little professor said...
It's worrying that Chrystal works as a "credit controller" - you'd think she'd know better.
I didn't realise at first - it's not a 100% mortgage, it's a 104% mortgage as they added fees onto the mortgage of £108,000, so they're already in negative equity before they've even started.
All this for a "one bedroom ex-council flat in Harlow, Essex"
Enjoy the next 40 years, kids....
6. Scott said...
Little professor has a point. As a credit controller you would think she'd know better. But I guess it happens; financial experts in the red, doctors and nurses who smoke, and so on. I wish them luck.
7. Leedel20 said...
The wisdom of the young, to be a slave for the next 40 years.
8. Canterburyman said...
Shocking... "Nicky and Mark Bedford....earning £33,000....living with Mark's parents while looking for a property....didn't have a deposit of £7,000..."
Living at home and couldn't save?
Nicky says "If we stay here for 3 or 4 years and then sell, will give us enough capital to move to the US... and start our own proprerty management business..."
Argggggggg
9. Doctor Gloom said...
Guts 10/10, intelligence 0/10.
When all their mates (the ones who sit tight and wait for a correction) are all living comfortably in thier 4 bed twin garage homes in the suburbs, can look back at these couple of mugs and will be glad that they made the right decisions. They seem to think renting is dead money but isn't the massive interest on these hefty mortgages?......
10. Simon said...
total mugs! get a life dudes. go back to renting!!
laters. agen....
11. denzil said...
It's not the 1st April is it?
12. sirgoogle said...
Hey - I understand the desperation. This is precisely what we did in 1988 before the crash-that-nobody-predicted. Our situation was even bleaker, we could not rent (too expensive) and could not get a council house (as we had jobs and council house stock were being sold off to lucky tennents by the b@5t@rd Conservative party). Only way out was to sign up for a 40 year mortgage - 11 years of negative equity and latterly self imposed exile.
I have not forgotten the idiot clowns in Govt at the time. I hope I might meet some of them in a dark alley one night. Do not trust the Conservatives, they got us into this mess (and I view new Liebour as a branch of the Conservative party for continuing these housing "policies").
13. Freewheelin' Franklin said...
I'm starting to question Darwin's theory of natural selection.
14. Taffee said...
Its so late 80's but with much more debt..........prices must fall and will and its happening now
15. d'oh said...
The poor kids aren't even out of their teens. They are too young to have a perspective - they have spent their teenage years watching property porn. What else would they have done? Tragic. Those that are older enough to know better (their bank manager, their parents, the BBC) should be ashamed of themselves.
16. Rakno said...
Leave them alone. at least their not wearing hoddies, taking drugs and mugging old ladies.
17. maddison said...
Guys have any of your heard of Rackman? Who says rents wont rise. In an inflationary environment rents will rise significantly. Commercial rents have gone up in the last couple of years. Rents will be affected by the same economic principals as prices - demand and supply. In Sydney they are talking about a 40% rise in rents over the next few years due to lack of rental stock.
18. Tick Tock said...
hahahahahahahaha
19. rich said...
Maddison - If house price rises are governed by supply and demand, surely we should see falls in places like Poland where people have emmigrated to the UK (amongst others)? Prices in Poland are shooting upwards. While supply and demand do obviously have an effect, they are by far the only factor.
Why would this teenage couple agree to a 40-year interest only mortgage if they didn't expect prices to skyrocket? Why would "Nicky and Mark Bedford" think they could get enough capital in 4 years to start a property business in the US? The expecation of future gains, i.e. speculation, is by far the bigger effect on prices.
20. rich said...
To follow up my previous post, I was referring to "demand caused by people needing somewhere to live", rather than "demand caused by property speculation", I should have thought that argument through a bit better before writing.
See stats below for decreasing population of Poland (CIA: )
Population growth rate: -0.05% (2006 est.)
Birth rate: 9.85 births/1,000 population (2006 est.)
Death rate: 9.89 deaths/1,000 population (2006 est.)
Net migration rate: -0.46 migrant(s)/1,000 population (2006 est.)
The population is also forecast to decrease by 5 million (a solid 12%) by 2050:
http://www.demogr.mpg.de/papers/working/wp-2006-026.pdf
21. inbreda said...
Maddison - the proportion of FTBs has been falling for a long time. The housing market is propped up by BTL. The supply of properties to rent is increasing.
By your own argument, rents should be falling as the supply of rental property increases faster than demand.
So you are right, supply and demand will cause house prices to fall.
22. Sam said...
good point sirgoogle, but you're closer to the truth than you know. David -Tony 2.0- Cameron was a adivsor to norman lamont in the late eighties. you'd think with that experience he's be able to create a policy or two but he can't.
he 'left' politics in the 90s and worked at places like Calton TV.
Also on the population front I think that the biggest increase in houseing demand is single person households.
23. headmelter said...
Pitiful just pitiful.