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About Standent

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  1. The rather simplistic approach such as 3.5x salary doesn't always yield proper results anyway. If Nationwide only lent, say, £75,000 bringing the mortgage payment down to, say 30% of take home pay (I haven't bothered running proper numbers here, it's the principle of the matter), then the suggestion is that this is more responsible. Howver, what if the borrower has £30k outstanding on maxed out credit cards? Banks over recent years (quite rightly in my opinion) have focussed instead on DSR: Debt Servicing Ratio. From all the models I looked at in the past, this was generally set at around 40% (i.e. aggregate repayments on existing debts of a customer plus the repayments on the proposed mortgage should not be more than 40% of net pay). The problem with this is that the DSR is only calculated at a point in time. It's bad enough that the banks relaxed criteria to permit higher ratios but then you also have: (a) borrowers lying on application forms or being too stupid to fill them out properly (i.e. failing to mention student loans / credit cards / hire purchase arrangements); (b ) borrowers being granted mortgage approval on the basis of having a deposit available when in fact the 'deposit' is a sum of money obtained by the borrower in the period between the date of the mortgage approval and completion courtesy of a personal loan (I saw many instances of that scam a few years back); © borrowers using someone elses savings (friends / family) as evidence of deposit, taking out mortgage and then using the personal loan trick to repay the friend/family; and (d) even if the borrower has a 40% DSR at completion, in the period after completion there's nothing to stop that borrower busting the DSR by maxing out a credit card or MEWing off the back of rising prices ... (d) is the most common factor.. something that doesn't happen as much in the corporate world as banks insist upon financial covenants in loan agreements and actually monitor them. Perhaps that's the shape of things to come : signing up to a mortgage where there's an event of default if you try and take additional lending from anywhere else.
  2. My point appears to have been lost on you. I'm very sure that the banks profit hugely from bank charges (and fractional reserve banking) and I don't need to visit Martin's website (I may not post much on here but I'm an avid lurker on this site and others and have been for several years). The point is much more basic (so put aside all the anti-capitalist thoughts for a moment): if a person can't manage their account properly, in my opinion, they deserve to be punished with punative interest rates and charges. Some people may think this is harsh but I just don't think there is any excuse for financial illiteracy. In the same way, I don't want to hear anyone bleating about having had their BTL property having been repossesed because the numbers don't (and didn't ever) stack up.
  3. Errr... you could just throw the letter in the bin (ergo you have "opted in") and then (continue to) manage your account in a proper manner such that you never actually need to use the reserve. This was introduced because people have been moaning about the cost of bank charges, particularly for bounced cheques / returned direct debits etc. Personally I've always thought bank charges are perfectly reasonable, particularly given that these fees (arguably) support the provision of 'free' banking for normal customers (remember the days when banks charged ALL customers for the privilege of maintaining an account? Anyway, the answer was (and remains): don't write a cheque / don't agree to make payments by direct debit unless you've actually got money in your account. End of story.
  4. I feel honoured to have contributed to these figures... I've spent more cash in the past 2 months on consumer goods and clothes than I have (combined) over the past 3 years. All purchases were funded from my cash savings and I made myself feel less guilty about these purchases (after years of being prudent) because, whilst I've clearly diminished the amount of my available deposit (I'll be a first time buyer... eventually), the amount I actually spent was tiny relative to the fall in "value" attributable to the average property I will eventually be looking to buy. So, perhaps these figures aren't driven entirely by inflation and a last splurge of the debt ridden masses... maybe it's all the bears on this site finally feeling a little bit flush. It's the reverse of "equity release" ... "negative equity release". (nb - I do know that the logical thing to do was to maintain the value of my deposit etc etc...still, my new telly is awesome and we've all got to "live a little" sometimes.)
  5. Barclays do a Currency Call Deposit Account. If you already have a Barclays current account (or if you open one) its free to open the deposit account provided you deposit something like US$2k (equivalent in whatever currency you want). The interest rate is pretty reasonable (depends on currency). I was put onto this a couple of months ago by another poster and opened a Swiss Franc account - they do euro, yen, dollar etc. All very easy (save its telephone based). Its not on the web - you have to go into a barclays branch and ask for the application form "Currency Call Deposit Account" - most of the staff won't have a clue what you're talking about (as only a few branches stock the application forms) but stick with it and you'll get the form. I had to call Premier Banking in the end and they sent it through (its administered by Barclays International down in Poole)
  6. From what I read last night and this morning (i.e evening post and metro) the slant was quoting hometrack and saying how this is "yet another blow for the poor old FTB... who will be forced to find another £16 a month on their 100k mortgage." Of course, the alternative slant wouldn't be quite so acceptable to the mainstream: "this is likely to weaken the confidence of buyers prompting a slow-down in the market which in turn will lead to a number of forced sales. Ultimately this should result in an increasing gap between asking price and amount offered (assuming sellers are too pig-headed to reduce asking prices).
  7. I'm not sure it matters to most people. You've less of a problem buying at the peak provided you sell at the peak (not that I'm suggesting what we're experiencing is a "peak", that's for expert economists to suggest). The way I rationalise everything is like Father Fred - just looking at the general economic indicators and assessing the risks. I'm a first time buyer so my thinking (in no logical order) goes along the lines of: 1. if prices continue at 5%+ pa then I'll be "priced out" within 2 years 2. at the moment the place I live in is cheaper to rent than to buy (on i/o basis) 3. houses prices are historically high 4. interest rates are historically low 5. inflation is historically low (if you believe the government figures) Based on that we all make our own assessment of relative risks. Personally I find the idea of taking a 4x income mortgage is considerably more risky than the risk of being "priced out" by 5% pa rises for 2 years. I might be wrong to arrive at that conclusion but to me, it doesn't make economic sense to buy an asset at a historically high price when inflation and interest rates are at historically low levels. Surely "historic high / historic low" suggests that the position is more likely to reverse in the future rather than keep moving in the direction seen in the past 5 years? Of course, this all assumes governments will act aggressively to control wage/cost inflation... any sign they won't and I'll buy!
  8. I live in London. I am a solicitor. I earn £60k plus bonus. My mrs earns £30k. We're both in our late 20's. My employer and I contribute (jointly) around £7,000 to my pension. The mrs and I rent a flat together for £15,600 per year. A more or less identical flat 4 doors down the road is being offered for rent at £16,000 per year The same flat is also on the market at £325k We could afford to buy it, however, we're one of a very small minority of FTB's who actually could. But, then again, why on earth would we want to buy? Assuming a 10% deposit an i/o mortgage, (and yes, we do have the 10% saved), a 90% mortgage would be around £14,625 per year. So, take into account the transaction costs (say amortised over 5 years) and then work out the cost of buildings insurance, depreciation of white goods, repairs and maintence etc etc. Also take into account the (rather boring and safe) £1500 annual return we currently receive on savings.... Well, it's not even worth adding it all up. Suffice to say I'm going to ignore all rational economic behaviour and follow the advice of Krusty the numpty by jumping on the ladder immediately. London prices are sure to double within 5 years aren't they and if I don't buy now, I'll be "priced out". But, priced out by who I ask? A BTL investor? Probably, I know I'd kill for that kind of yield. Anyway, I just wish I'd gone into a better paid profession because if you believe the usual rubbish people spout, clearly you'll very shortly need the buying power of a premiership footballer to buy property in London. Stan
  9. I too reached debt-free status two months ago. It only took me 9 and a half years to pay off all the debts I incurred on the way to becoming a "well-paid" corporate lawyer in the City. Yep, nearly ten years only to find that perhaps it was all a bit pointless. Of course, being debt-free on a fairly large salary means I could now take a 5.5x mortgage to buy the flat I currently rent! Presumably I should jump at the chance as the value of this flat can only go up both in the short and long term? I took a new credit card three weeks ago (purely because on every successful application the credit card company makes a donation to a 'charity' I follow). At the same time, I closed an existing credit card account (again, just for personal non-economic reasons). With both companies you had operators with a similar script - one was trying to retain me as a customer and the other looking to convince me to join. They needn't have bothered given I didn't care but it was interesting that both of them sounded a bit surprised when I declined 0% balance transfers (as though it was unheard of). They also didn't seem to understand the comment "I only use a credit card for convenience - I pay the balance off every month). Crazy world. Stan
  10. Please don't tell me this means you actually "eye-up" that lazy slug... [shudder]
  11. Has Kirstie got a lazy eye? As I was quite close to the television this morning (shouting obscenities) while she gave her "expert" opinion, I'm sure I caught seeing her left eye wandering off without the right one following...
  12. Not surprised. Despite what you might think about solicitors (they have a particularly bad reputation in the field of residential conveyancing), they're also bound by professional ethics. Hence, they can't knowingly sit by and watch an unrepresented numpty balls something up. Also, there's convention about who does what in a sale (sharing the pain of drafting etc). Again, a numpty doesn't know this so the solicitor in question ends up doing twice the work . Note to anyone thinking of doing a DIY job - I'm a solicitor and could quite easily do the work myself yet wouldn't dream of doing so. Likewise none of my colleagues would think about it. In well over 99% of cases no serious problems arise in a conveyance of residntial property. However, what you're paying your grand for is to protect you if there's a balls up (i.e. you get the benefit of your solicitors indemnity insurance). In the grand scheme of things, solicitors do a hell of lot more for their money than the spotty youth who shows people round your home and then takes an obscene cut of your sale proceeds.
  13. The catch is that "Lock-in Value Equity Ltd" isn't regulated by the FSA and I would therefore suspect this is a massive scam. The scheme has no guarantee and credibility seems to be reliant upon "we have a substantial capital backing". Hmmmm... I can it now... shell out your £1700 and then in 2 years time you try and sell only to discover that Lock-in Value Equity Ltd has already been wound-up... This company is bound to end up on Watchdog.
  14. I've also just renewed for the third year on my flat at the same rent (which is cheaper to rent than to buy). In SW12 so round the corner from TTRTR's patch. The flat is let and managed by a very reputable SW EA and every year they give me same crap about how inflation is currently running at x% and therefore there'll be an increase in the rent of £x per week. To date I have always replied in the same manner: "piss off and find a new tenant then". Funnily enough that seems to do the trick. Hence, the point of this is to say that some figures are distorted by the fact that I believe many tenants blindly accept rental increases linked to inflation without considering what else is available to rent in the area (after all, it's quite a hassle to move). Looking around, I see that asking prices for flats like mine (to rent) are generally lower than they were 2 years ago. But as we all know, it's not a freely liquid market and its generally not worth moving if you're settled. Still - that works both ways and tenants need to reject any rental increases.
  15. This is the kind of rubbish that really annoys me. Fact - I pay market rate rent on the flat I rent amounting to £15,600 pa. The current asking price for the flat I live in is £310k. Even assuming an offer of £300k is accepted, an interest only mortgage at 5% costs £15,000 per annum. Factor in (i) the service charge of £750 pa; (ii) the cost of depreciation attributable to white goods, carpets and curtains etc.; and (iii) one tenth of the transaction costs attributable to the move (assuming 10 year period before moving again... I'm being generous with the stability factors here) £1k.... £16,750 pa So errrrr... it costs over a grand more to buy my flat than to rent it... How can it be that "all that money is lost"? You're just gambling on your asset appreciating. Not a great bet in a static or falling market.
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