Sunday, Oct 07, 2007
Melting down quickly
Times: Loans shock on foreign homes
THOUSANDS of British people with second homes abroad are the latest to face a payment shock following the global credit crunch, as lenders across Europe raise their rates and tighten up their criteria.
Posted by confused76 @ 11:14 PM (415 views) Add Comment
2 Comments
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1. Safeazowziz said...
Amazing how generous these developers are - you are able to buy a 625K for 500K.......
Suppose someone bought a property valued at 625,000, but got a discount so they only paid 500,000. The bank might still lend, say, 80% of the 625,000 valuation price, or 500,000.
Banks were prepared to turna blind eye when prices were rising fast, but as values have come down they face lending on homes in negative equity.
As a result, most lenders will now advance only on the lowest price, whether that be the declared price or the valuation price. This means many second homebuyers will not be able to get such a big mortgage. Using the above example, the borrower would only be able to get 400,000 � 80% of 500,000.
Norwich & Peterborough building society, which offers mortgages in Spain, has recently changed its criteria. It used to lend up to 75% of the valuation price. However, it will now lend up to 75% of the valuation price or 90% of the declared price, whichever is lower.
Do people really beleive a developer would sell you a property for 500k if they could get 625K?
2. crash bandicoot said...
"but dont assume you will be able to borrow 100%.
That says it all. It just shows how lax our attitude to borrowing has become. Ten years ago the prevailing attitude was that if you needed to borrow 100% then you couldn't really afford to buy (anything).