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Pluto

Negative Equity Has Arrived!

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http://www.theherald.co.uk/business/45907.html

You will see a lot more reports of negative equity for BTL's.  They stand to loose the most, as a lot of them have multiple properties.

Average yields in Glasgow and Edinburgh city centres of 3.5% gross! :blink:

How on God's earth did we reach this point? They'll soon be paying tenants to occupy....

Another interesting point is the situation with neg. equity. I have asked the question a few times what happens if BTL value falls below mortgage.

This article indicates that banks are "unlikely" to force a sale as long as interest is being paid, but that implies that they could if they wanted to (e.g. if they felt that further falls were likely and wanted as much of the loan back as possible).

It also points out that remortgaging would become extremely difficult in a little/no/negative equity situation. Homeowner then can't shop around for competitive deals, and is at the mercy of their bank's standard variable rate (and maybe then some....).

You could almost believe the banks planned this move. They are going to be raping BTLers when they get them in that Grip of Death........ :(

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Guest Bart of Darkness
They are going to be raping BTLers when they get them in that Grip of Death

I like that image. :lol:

Bend over and grab your ankles TTRTR! :P

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Guest muttley
This article indicates that banks are "unlikely" to force a sale as long as interest is being paid, but that implies that they could if they wanted to (e.g. if they felt that further falls were likely and wanted as much of the loan back as possible).

So long as you're repaying every month the bank won't call in the loan.No way.

Calling in the loan would just bring forward bankcrupcy.

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"It is very easy to see negative equity and a complete loss of the borrower's capital," warns Brown.

That of course assumes that the borrower, actually used his 'capital' to finance the 15% deposit. If 'he' used the 'equity' in his home to finance the deal, then his home goes the same way as the BTL, and he is homeless.

No BTL's, no home, no credit rating and little if any hope of ever being able to work themselves out of the mess they find themselves in.

I'm not gloating, I actually feel sorry for the poor buggers. They have only tried to provide for themselves and their families...... one mans 'profiteering is another mans wish to pay for his kids University education.

I feel it is, what I consider, to be total lack of fiscal responsibility on the part of governments and lending institutions that bought 'us' to this state of affairs.

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I feel it is, what I consider, to be total lack of fiscal responsibility on the part of governments and lending institutions that bought 'us' to this state of affairs.

Couldn't agree more. I am just waiting for the 'blaming' to start. Lenders who didn't check customers details/lent to easily etc. Individuals who were, let's say, 'creative' with their income. Or the government who sat back and watched this happen because they thought feeling rich would keep voters happy.

Personally I blame the lot of them for being STUPID :P

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As soon as the perception reflects the state of the market..

Shows the current drop in house prices.. (The "statistics don't seem to reflect what is actually going on.. and can be seen clerely in the papers..)

As soon as the crash occurs in the media..

As in the Telly.. the papers go on about it constantly..

then the finger pointing..

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Guest muttley
I feel it is, what I consider,  to be total lack of fiscal responsibility on the part of governments and lending institutions that bought 'us' to this state of affairs.

I disagree.

If you are going to gamble your mortgage on a business idea,then you should do your homework.A prudent approach with BTL would be a 30% deposit,and a 10% yield (allowing for 2 months per year void).

You should also ask a lot of "What if.....?" questions.

You should also be prepared to take full responsibility if it all goes wrong.

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I disagree.

If you are going to gamble your mortgage on a business idea,then you should do your homework.A prudent approach with BTL would be a 30% deposit,and a 10% yield (allowing for 2 months per year void).

You should also ask a lot of "What if.....?" questions.

You should also be prepared to take full responsibility if it all goes wrong.

The problem was people were sold BTL as an investment. It isn't, letting is a business and needs to be run as one.

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Guest muttley
The problem was people were sold BTL as an investment. It isn't, letting is a business and needs to be run as one.

Absolutely.But people should take responsibility for their own financial decisions.I don't think it is enough to say "Well,the bank don't seem to mind."

Banks are in the business of making money,not providing one-way investment vehicles.

People have been seduced by cheap money.

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I'm not gloating, I actually feel sorry for the poor buggers.

Why?

They've been happy to price FTBs who just want to buy a house to live in out of the market for years in order to make a quick buck for doing _NOTHING_. Personally I think the new bankruptcy laws will mean they get off far too easily for the pain they've caused to so many people in the pursuit of easy money.

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Bankruptcy

What is Bankruptcy?

Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. For a first time bankruptcy within a 15 year period, for debts under £20,000, the procedure is known as a Summary Administration and you may be discharged after two years. A first time bankrupt with debts over £20,000 may be discharged after three years.

Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.

Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the Individual Voluntary Arrangement procedure (IVA).

Bankruptcy is one way of dealing with debts you cannot pay. The bankruptcy proceedings:-

 

free you from overwhelming debts so you can make a fresh start, subject to some restrictions

make sure your assets are shared out fairly among your creditors.

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves. 

How are you made bankrupt?

An individual can be made bankrupt either in one of three ways. 

Voluntarily - By the debtor themselves.

Involuntarily - By the creditor owed money (£750 Minimum).

The supervisor or anyone bound by an IVA

A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor’s claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.

What are the implications of bankruptcy?

You lose control of your assets.

You cannot obtain credit for over £250 without the permission from the lender.

You cannot act as a company director.

You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.

You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.

You may not practice as a Charted Accountant / Lawyer

You may not act as a Justice of the peace (JP)

You may not become an member of parliament

You may not become a member of the local authority.

Your credit is affected for many years after the annulment.

You may be publicly examined in court.

What are the advantages of bankruptcy?

For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after two or three years.

For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.   

http://www.insolvencyhelpline.co.uk/bankru..._bankruptcy.htm

Seems more like a slap on the wrist to me. :rolleyes:

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  • 301 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
      • up 2.5%
      • up 5%



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