Is There Anyone In A Worse Position?

[zoxx]

I met a friend of a friend last week, here's his story..

He's single, bought a house in rural Northern Ireland in summer 2007 (ouch) fixed-rate interest only mortgage, £700pm. I asked him if he had a repayment vehicle set up - "a what?" - I asked if he had been putting savings aside to cover the repayment - "oh, i have about £1000"

To make matters worse, he's just been laid off. Amazingly, for someone in his position, he seems remarkably unbothered.

Best statement though, when explaining to another friend what an interest only mortgage was - "well normally, obviously, house prices keep going up, so when you come to sell the house you can pay it off" *smack hand off forehead*

and "obviously now with negative equity and all it's a bit crap, but I can always just rent it out to cover the mortgage" -

in a tiny village in the middle of nowhere, good luck!

This guy could be the poster-boy for the HPC

[pie-eater]

I met a friend of a friend last week, here's his story..

He's single, bought a house in rural Northern Ireland in summer 2007 (ouch) fixed-rate interest only mortgage, £700pm. I asked him if he had a repayment vehicle set up - "a what?" - I asked if he had been putting savings aside to cover the repayment - "oh, i have about £1000"

To make matters worse, he's just been laid off. Amazingly, for someone in his position, he seems remarkably unbothered.

Best statement though, when explaining to another friend what an interest only mortgage was - "well normally, obviously, house prices keep going up, so when you come to sell the house you can pay it off" *smack hand off forehead*

and "obviously now with negative equity and all it's a bit crap, but I can always just rent it out to cover the mortgage" -

in a tiny village in the middle of nowhere, good luck!

This guy could be the poster-boy for the HPC

A good friend of mine is also trapped - but at least he has a decent paying job.

In July 07 he foolishly got into a bidding war on a tiny 1 bed basement flat in Croyden. It was up for £167500 but he ended up paying £175000 for it.

He had it valued a month ago as he "I fancy somewhere bigger and want to take advantage of the low rates".

He bought it on a 100% mortgage, fixed for 5 years. Valuation was £135000 with a view to getting late £120s!!

Trapped in a tiny slave box and his repayments are £250 over what rentals go for in his street.

[Telometer]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

[BlackSwan]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

I think you miss the point.

This is not gloating at the person - it is highlighting the real world effect of the VI/Ramping/Meeja

Most normal people would never have felt compelled to panic buy property unless they had been brainwashed into doing so.

Edited July 2, 2009 by BlackSwan

[pie-eater]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

Who's gloating?

Why would I enjoy seeing 'a good friend', as listed being trapped and severely out of pocket?

I feel sorry for him; end of story.

You need to read things for what they are - a victim of stupid pricing and the VI machine that has reeled people in and spat them out.

Edited July 2, 2009 by pie-eater

[Telometer]

I feel sorry for him; end of story.

You feel sorry enough for him to broadcast his plight (albeit anonymously) on the 'net. With friends like you...

OP was the one whom I really felt was gloating with

This guy could be the poster-boy for the HPC.

Thep oor devil is in a shocking situation, yet is apparently making the best of it and remains cheery.

[pie-eater]

You feel sorry enough for him to broadcast his plight (albeit anonymously) on the 'net. With friends like you...

OP was the one whom I really felt was gloating with Thep oor devil is in a shocking situation, yet is apparently making the best of it and remains cheery.

I've hardly given away his name and address....

Merely highlighting his plight, something he has told just about everyone in his daily moaning about it. Tis no sectret.

[Guest KingCharles1st]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

Look- this should not be a "Gloat" thread- as much as I really want to say "TOLD YOU SO."

It's stories like this need to be assembled into one place- then posted up on a website, and that web site linked to everyone's emails until EVERYBODY IN THE COUNTRY "gets it."

At that point- our wonderful wa nkers that cohabit Westminster will also "get it."

And then we will get the FINANCIAL RESET this whole bloody mess is desperate for.

A nice bonus would be Brown's head on a spike at Traitor's Gate- which if we went back 300 years would almost definitely be the case

[D Vardy's Shadow]

You feel sorry enough for him to broadcast his plight (albeit anonymously) on the 'net. With friends like you...

OP was the one whom I really felt was gloating with Thep oor devil is in a shocking situation, yet is apparently making the best of it and remains cheery.

Then let's cover these stories up and pretend that this sort of thing is not happening. Perhaps the mods should ban anyone who knows someone in similar circumstances in case they let word slip out?

[geoffk]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

IF they had listened to you fools far more would be in the crap due to you leeches.

when spending 150k do you not recommend they do just a little homework and in late 2007 early 2008 anyone could see this was a bubble.......and what do bubbles do ?

[jborg]

A good friend of mine is also trapped - but at least he has a decent paying job.

In July 07 he foolishly got into a bidding war on a tiny 1 bed basement flat in Croyden. It was up for £167500 but he ended up paying £175000 for it.

He had it valued a month ago as he "I fancy somewhere bigger and want to take advantage of the low rates".

He bought it on a 100% mortgage, fixed for 5 years. Valuation was £135000 with a view to getting late £120s!!

Trapped in a tiny slave box and his repayments are £250 over what rentals go for in his street.

Surely it's no different to the "my friend bought a flat for 150K last week now its worth 300k" stories which have got us into this mess into the first place....works both ways.

Sorry - meant to link to Telometers post

Edited July 5, 2009 by jborg

[Mikhail Liebenstein]

It is amazing how much damage the property market has done.

I have written about this before, someone I know came into £700k and rushed out an bought a £1.3m house, with a new mortgage deciding they could sell the old house later. New house deal signed late 2007, move in about 6 months later as they had a delayed completion.

Meanwhile old house fails to sell, so they decided to let it and have problems with bad tenants.

Anyhow, the original house is now under offer, but £250k below their original asking price. Meanwhile and this is where the damaged has occurred, it is plainly apparently that the house they bought was massively overpriced. The originally asking price was something like £1.1m and the £1.3m came about from a bidding war. Other houses in the area (perhaps without the extension and loft conversion) are not even now selling for £750k, so I estimate their new house were it put on the market today might be advertised at £850k and perhaps get £775k.

So by my reckoning that's a loss off (£1.3M - £775K) + £250K = £775K in just 18 months.

[RichB]

Then your reckoning is flawed.

What did they pay for the house they already had?

[Neverland]

It is amazing how much damage the property market has done.

I have written about this before, someone I know came into £700k and rushed out an bought a £1.3m house, with a new mortgage deciding they could sell the old house later. New house deal signed late 2007, move in about 6 months later as they had a delayed completion.

Meanwhile old house fails to sell, so they decided to let it and have problems with bad tenants.

Anyhow, the original house is now under offer, but £250k below their original asking price. Meanwhile and this is where the damaged has occurred, it is plainly apparently that the house they bought was massively overpriced. The originally asking price was something like £1.1m and the £1.3m came about from a bidding war. Other houses in the area (perhaps without the extension and loft conversion) are not even now selling for £750k, so I estimate their new house were it put on the market today might be advertised at £850k and perhaps get £775k.

So by my reckoning that's a loss off (£1.3M - £775K) + £250K = £775K in just 18 months.

[tomwatkins]

Why do you ghastly people feel the need to gloat over such people in a disastrous financial position. They were unlucky in when they chose to buy.

There but for the grace of God go we all.

God has nowt to do with greed and stupidity. In fact quite the opposite. The only time Christ got angry was in the temple and the money changing geezers. They were probably the first derivative traders in recorded history. Nobody should be gloating but I did have a few mates (now in neg equity) who gloated at me because I didn't buy in 2006/7. What's good for the goose and all that jazz.

[Neverland]

Oops, think I messed up the first attempt to post....

What I was going to say is that I think the £770k or whatever loss calculation is right

Buying things with borrowed money can demolish or create paper wealth at a scary rate - google hedge fund, lehman brothers, bear stearns or david ross, carphone warehouse to see how...

The only time ordinary people, with no interest in finance, get the chance to gamble on buying investments with borrowed money is in the housing market and then then can borrow 9x what they put down

Its pretty scary if you think about it in these terms

Really I guess the answer is mortgage regulation should be much tighter

My horror story is an an acquaintance of mine in her early 30s who got £20k in a divorce settlement from her husband and ploughed the lot plus another borrowed £90k to buy 40% of a shared ownership new 2 bed flat in a new tower block in east london near the olympics for £280k in mid 2007

End result, all her settlement is gone and she probably is a little underwater on the loan (so far)

If she hadnt been caught up in the 2002-2007 house price mania she would still have those savings

I would imagine anyone who was a FTB in 2006-2008 is in the same boat, possibly worse....

[pie-eater]

My horror story is an an acquaintance of mine in her early 30s who got £20k in a divorce settlement from her husband and ploughed the lot plus another borrowed £90k to buy 40% of a shared ownership new 2 bed flat in a new tower block in east london near the olympics for £280k in mid 2007

End result, all her settlement is gone and she probably is a little underwater on the loan (so far)

If she hadnt been caught up in the 2002-2007 house price mania she would still have those savings

I would imagine anyone who was a FTB in 2006-2008 is in the same boat, possibly worse....

But......... IS SHE FIT?

[Neverland]

But......... IS SHE FIT?

Yeah, blond 5'10 goes like a wolverine

For £50, I'll give you her email

[Penny Drop]

Nice, sexist pig comments - great. Good to see how evolved you are - prats.

Oh and while we are at it, "Are you both well hung?"...your brains seem to be in your trousers anyway.

Looking forward to the indignant backlash...

[AteMoose]

All HPC members are well hung... and we have balls of steel....

[Neverland]

Nice, sexist pig comments - great. Good to see how evolved you are - prats.

Oh and while we are at it, "Are you both well hung?"...your brains seem to be in your trousers anyway.

Looking forward to the indignant backlash...

I have tiny shrivelled walnuts, but a big deposit

You can have my email for free ;-)

[Caribbean Beauty]

I think Telometer is being uncharacteristically condemnatory (try repeating that very fast over and over when p***ed) on this thread.

IMO the OP and others are welcome to bring this type of anectodal to the, eeerm, anecdotal section. My own personal private - laden with shadenfruede (spelling?) and perplexed fascination is into the mind-set of those who have opted for interest only mortgages with no repayment vehicle. This thread has helped to confirm my belief - that only an unthinking numpty would take out such a loan then never save or pay it down in big lumps. The chap described will end up - 28 years from now (assuming a 30 year IO mortgage) - having rented his home from the bank then getting a final demand for the entire original sum to be paid off!

Short of being captured and tortured/executed by the Taliban, can anyone think of anything worse than the purgatory this man, and hundreds of thousands of other numpties, will be living in for decades to come while swamped with massive NE and saddled with IOs?

[Neverland]

I think Telometer is being uncharacteristically condemnatory (try repeating that very fast over and over when p***ed) on this thread.

IMO the OP and others are welcome to bring this type of anectodal to the, eeerm, anecdotal section. My own personal private - laden with shadenfruede (spelling?) and perplexed fascination is into the mind-set of those who have opted for interest only mortgages with no repayment vehicle. This thread has helped to confirm my belief - that only an unthinking numpty would take out such a loan then never save or pay it down in big lumps. The chap described will end up - 28 years from now (assuming a 30 year IO mortgage) - having rented his home from the bank then getting a final demand for the entire original sum to be paid off!

Short of being captured and tortured/executed by the Taliban, can anyone think of anything worse than the purgatory this man, and hundreds of thousands of other numpties, will be living in for decades to come while swamped with massive NE and saddled with IOs?

Youd be amazed many of them are well educated and hold down respectable jobs

They just seem to have a blindspot about appreciating risk = reward and there are no free lunches

I also know someone who took out a mortgage (having paid one off with some life insurance money) to invest in tech stocks at the start of the decade

[Moley]

It is amazing how much damage the property market has done.

I have written about this before, someone I know came into £700k and rushed out an bought a £1.3m house, with a new mortgage deciding they could sell the old house later. New house deal signed late 2007, move in about 6 months later as they had a delayed completion.

Meanwhile old house fails to sell, so they decided to let it and have problems with bad tenants.

Anyhow, the original house is now under offer, but £250k below their original asking price. Meanwhile and this is where the damaged has occurred, it is plainly apparently that the house they bought was massively overpriced. The originally asking price was something like £1.1m and the £1.3m came about from a bidding war. Other houses in the area (perhaps without the extension and loft conversion) are not even now selling for £750k, so I estimate their new house were it put on the market today might be advertised at £850k and perhaps get £775k.

So by my reckoning that's a loss off (£1.3M - £775K) + £250K = £775K in just 18 months.

Extension and loft conversion? At that price I thought they had bought a manor house in the country! FFS! Where is it?

[Telometer]

IF they had listened to you fools far more would be in the crap due to you leeches.

when spending 150k do you not recommend they do just a little homework and in late 2007 early 2008 anyone could see this was a bubble.......and what do bubbles do ?

It was already a bubble in 2002. Like it or not, people like to own their own homes. Should they seriously not do so for a whole decade or more? Nuts.