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Bes

If I Don't Laugh, I'll Cry...

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Guy wants to buy a property at £540,000 in SE London with a mate. He says:"its not in the nicest part of town (not the worst, but hasn't got the greatest reputation).... about 10 mins walk from london bridge"

(So that puts them somewhere like Bermondsey or somewhere in Southwark at a guess)

-Said mate earns 18,000 (Yes 18 thousand, you would think I am missing a zero off the end given the value of the property)

-They are going I/O at £450 p/m each, but it'll "all be OK" because they are going to rent out the third bedroom...

-Valuation of poperty by lender is a lot lower than the mortgage so are looking to get so doubtful they will get this anyway, but they will try. How the holy **** anyone could think this is 'financially sound' as he states just boggles the mind.

To me this encapsulates everything that is wrong with most young people today and their ****ed up views on the property market.

http://forums.overclockers.co.uk/showthread.php?t=18163649

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There's people on MSE all the time moaning about the property they want to buy has been valued for less than they've offered

"what do we do" they whine. It's sad. Really.

We have been breeding financially illiterate monkies for far too long.

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My word

It reads as if they have not even considered the possibility of a rise in interest rates, and have nothing in place at all to pay off the capital. Somewhere down the line someone is going to have to pony up 350-400k; my suspicion is that the 18k-a-year mate's mum won't be able or willing to....

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Says he's got a 30% deposit though.

If i was the lender, i might just issue the mortgage, take his 30% deposit, await the imminent missing of payments, repossess, get the 30% deposit and resell to the next cash rich moron to come along who'll give me another 30% deposit.

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Over half a million for a flat in a grotty area. Insane. Is very secure but then says he probably won't get approved for a mortgage in a couple of months. Maybe the real plan is to buy and then lose their jobs and get the gov to cover it at 6%. kerching!

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Says he's got a 30% deposit though.

If i was the lender, i might just issue the mortgage, take his 30% deposit, await the imminent missing of payments, repossess, get the 30% deposit and resell to the next cash rich moron to come along who'll give me another 30% deposit.

What would be the point of that . Lenders make their money from the interest they receive from the loans that they grant. Their business model is not based around making money via repossessions.

If the buyers default and the lender repossess , once the property is sold if there is any surplus after the mortgage has been repaid and cost's of repossession paid , the surplus money is returned to the borrower , the lender does not pocket any profit.

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There is no way that mortgage will approved to be honest. It's just shows though that even with a small raise in mortgage rates there will be a hell of lot of morons losing their homes.

I can't wait...

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He's missing the fundamental: with an IO mortgage he's just renting from the bank.

Is it really cheaper in the short term to do that than to rent from a landlord ? I suppose it may be, but I doubt it's going to remain that way. And the handcuffs are...significant.

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What would be the point of that . Lenders make their money from the interest they receive from the loans that they grant. Their business model is not based around making money via repossessions.

This actually was the business model of the sub prime lenders.

There was a lot of money to be made in fees for missing or late payments and "Debt Counselling" and they relied on a proportion of borrowers getting into difficulty inside the period in which Early Repayment Charges would apply.

A nice little earner as long as the value of the property covered all those charges and prices continued going up.

the rest is history.

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He's missing the fundamental: with an IO mortgage he's just renting from the bank.

Is it really cheaper in the short term to do that than to rent from a landlord ? I suppose it may be, but I doubt it's going to remain that way. And the handcuffs are...significant.

mm I live just down the road (Greenwich) from the overpriced shithole he wants to buy. I have rented all my life (Am 27 now). I doubt I could buy the house I rent and get a mortgage at less than my rent- even with my £70,000 deposit and current low interest rates. Even if I could, what is the average cost of maintaining the stuff the LL does as part of the rental agreement annually?

eg:

Repairs to fixtures and fittings, boiler, etc

Buildings insurance

Roof/ masonry/ window repairs

I know these costs don't come along every year, but looking over 10 years, I am guessing it is going to average a couple of grand a year at the very least? (Even the place I live in which is the top 2 floors of a victorian terrace). Take a warehouse conversion and you are probably looking at 5K per year? (Large roof, probably large windows, floors, big buildings insurance bill, etc etc etc)? No idea as I have never had to pay for this stuff, so any figures anyone can throw in would be of interest.

Thanks

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What would be the point of that . Lenders make their money from the interest they receive from the loans that they grant. Their business model is not based around making money via repossessions.

If the buyers default and the lender repossess , once the property is sold if there is any surplus after the mortgage has been repaid and cost's of repossession paid , the surplus money is returned to the borrower , the lender does not pocket any profit.

Im sure they can squirrel away profits via levies, costs, and all the other 'innovative' products those Banksters dream up.

Anyway, i like this guys posts, obviously been listening to Gordon on the it started in 'merica BS.

AcidHell2

No, the bank mess had nothing to do with Uk mortgages.

AcidHell2

seeing as repossession rates stayed low through the crisis (although they did rise) I don't see what basis you have to say irresponsible lending. Something the media has blown all out of proportion.

Does this douche actually realise the govt is overpaying 300k+ mortgages because the mortageholders cant, and hundreds of thousands more are being subsidised by base rates at 1/10th rate of inflation or that countless borrowers are on mortgage holidays? Or the SLS? Or the Bailout?

Still, he has a Dodge Charger, so he's not all bad.

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Reading further... he is currently paying 2K a month in rent!

You would think someone who has the mental capacity to obtain a job that furnishes a £2,000 per month rent would be intelligent enough to realise why what he is trying to do is beyond mad.

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Guest Noodle

My word

It reads as if they have not even considered the possibility of a rise in interest rates, and have nothing in place at all to pay off the capital. Somewhere down the line someone is going to have to pony up 350-400k; my suspicion is that the 18k-a-year mate's mum won't be able or willing to....

It wasn't that long ago those numbers were financing SME's.

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You would think someone who has the mental capacity to obtain a job that furnishes a £2,000 per month rent would be intelligent enough to realise why what he is trying to do is beyond mad.

Maybe he works for Foxtons.

When my ex boss used to bang on about how brilliant he was, and that he played hardball, I just used to stare at him thinking 'but you pay 9K a month in rent for a nasty office of just 6 people!' Tool.

Still, the flat this guy wants has a ping pong table, woo!

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It wasn't that long ago those numbers were financing SME's.

Money that would have gone into the economy.

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Says he's got a 30% deposit though.

If i was the lender, i might just issue the mortgage, take his 30% deposit, await the imminent missing of payments, repossess, get the 30% deposit and resell to the next cash rich moron to come along who'll give me another 30% deposit.

That is exactly what the banks are doing for the past 2 years.

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i'm ultimately buying the place with a friend as i've known him for 20 years and he's an excellent bloke - without me he'd never have a chance of getting on the ladder

With friends like him...

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With friends like him...

How old are these guys?

Sounds like his friend is a trust fund casualty.

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its neither his or my idea to buy a place in this manner, but his mum's idea. she wouldn't let him rent as she wanted to a deposit down in his name. i raised this issue last night with him, in that his mum could effectively financially cripple him - however, she's always happy to (financially) support him. given my relationships with the family i duly obliged to go 50:50 on a property with him

Mummy's boy. I wonder how that "relationship with the family" would hold up when this all went tits-up

Anyway, as has been noted, it's not very likely to go through.

edit:

It just occurs to me that the whole thing might be ******** anyway; this is the Overclockers forum, and I wonder if Mr "I'm well paid but I won't say how-well" isn't just a chaved-up Saxa fantasist...

Edited by Mal Volio

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Mummy's boy. I wonder how that "relationship with the family" would hold up when this all went tits-up

Anyway, as has been noted, it's not very likely to go through.

Mummy won't let him rent? This is getting weird!

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Mummy won't let him rent? This is getting weird!

Of course not! Who rents? Renting is dirty and wrong: only immigrants and paedophiles, and the underclass rent!- everyone should be aiming to ****** themselves in the ass with a £500K mortgage on an £18K salary!

Edited by Bes

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  • 201 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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