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FedupTeddiBear

Anecdotal Again…

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On Sunday I met up with a group of friends I haven’t seen for a while.

The female half of a newly-married couple tells me excitedly that she has some news, and pauses to increase the suspense… They’ve bought their first flat! They decided not to wait any longer and went to the local EA to see what was available, who in turn told them of this “exciting opportunity” which is “guaranteed to increase in value by at least 5% over the next year”.

They took out a self-cert mortgage and since they do not have a deposit, took out an unsecured bank loan of £18000 to cover this. The plan is, in a year’s time, when the value has increased enough for them to be able to take out a new mortgage for a bigger place, they will rent this flat out. They have been told, and really believe that they “can’t lose.”

After a stunned silence instead of the excitable congratulations she seemed to be expecting, came the question “So why haven’t you bought yet?” in a slightly patronising tone.

The HPC-friendly answer was received with a quizzical look, and brushed off as nonsense. “Well you can’t believe everything you hear.” And “The longer you wait, the more money you will lose.”

Later, and more quietly I heard from her hubby that he has recently been made redundant and it seems to be taking him “slightly longer than expected” to find a new job.

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I was told by a new development sales person that house prices couldn't drop..

As I had just been given a 10% discount I made a glib of the cuff coment that they had dropped by about 7% durring our conversation..

but consider this..

should they be able to advise that house prices can't drop?

when they are..

Also.. by not reporting your friends for taking out a fraudulent mortgage you are complicit to a fraud.. breaking the law..

so punnishment...? well.. masive unmanageable debt..

and an 18,000 loan.. that must be hundreds a month..

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I know there are lots of people on the forum who laugh at people who fall into the EA’s traps, but I can’t help but feel really sorry for all the uninformed and naïve FTB’s out there. Most are too young to have learned anything from the last crash, and don’t often get to hear views disagreeing with what the BBC and other larger-than-life VI’s have to say.

:angry:

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I know there are lots of people on the forum who laugh at people who fall into the EA’s traps, but I can’t help but feel really sorry for all the uninformed and naïve FTB’s out there.

I know an FTB couple who have just bought. I think they've made a mistake, although I will feel sorry for them, should things go wrong.

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Guest Bart of Darkness
As I had just been given a 10% discount I made a glib of the cuff coment that they had dropped by about 7% durring our conversation.

:lol:

They took out a self-cert mortgage and since they do not have a deposit, took out an unsecured bank loan of £18000 to cover this. The plan is, in a year’s time, when the value has increased enough for them to be able to take out a new mortgage for a bigger place, they will rent this flat out. They have been told, and really believe that they “can’t lose.”

If "that which does not kill us makes us stronger" this pair should end up like Mr and Mrs Incredible.

While one can sympathise with people who are given misleading information, there's no way I would enter a financial commitment of that size and risk without a great deal more research.

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Later, and more quietly I heard from her hubby that he has recently been made redundant and it seems to be taking him “slightly longer than expected” to find a new job.

:o

FedupTeddiBear - my suggestion is to keep very quite about your views regarding RE. They are in a very nasty financial position and have a very poor financial sense IMHO

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On Sunday I met up with a group of friends I haven’t seen for a while.

The female half of a newly-married couple tells me excitedly that she has some news, and pauses to increase the suspense… They’ve bought their first flat! They decided not to wait any longer and went to the local EA to see what was available, who in turn told them of this “exciting opportunity” which is “guaranteed to increase in value by at least 5% over the next year”.

They took out a self-cert mortgage and since they do not have a deposit, took out an unsecured bank loan of £18000 to cover this. The plan is, in a year’s time, when the value has increased enough for them to be able to take out a new mortgage for a bigger place, they will rent this flat out. They have been told, and really believe that they “can’t lose.”

After a stunned silence instead of the excitable congratulations she seemed to be expecting, came the question “So why haven’t you bought yet?” in a slightly patronising tone.

The HPC-friendly answer was received with a quizzical look, and brushed off as nonsense. “Well you can’t believe everything you hear.” And “The longer you wait, the more money you will lose.”

Later, and more quietly I heard from her hubby that he has recently been made redundant and it seems to be taking him “slightly longer than expected” to find a new job.

Good grief.

So, he has recently been made redundant. It sounds like they've have then bought AFTER this fact. They also have absolutely no equity in the property since they have no deposit.

Not only are they fraudulently borrowing a deposit, effectively taking their LTV to 100%, but it would appear that they have self-certified in order to dodge the embarassing fact of his redundancy and lack of any income.

Assuming that their £18000 borrowed deposit (which will attract huge repayments on its own, let alone adding mortgage debt to it) is the usual 5%, this means that they have bought a property at £360000. With (presumably) one salary!

OK, perhaps not all of the £18000 is for the actual deposit, but for other things like stamp duty and estate agent fees. Perhaps the flat is £250000, and £2500 is stamp duty and another £2500 or so for estate agent fees and so on, requiring a £12500 deposit.

So they have a loan for £18000, a mortgage for £250000 and, at most, one earner at the moment.

At (alleged) average salarly of £25000, this is a whopping 10x salary.

If this scenario is not unusual then it backs up what apom has been saying as regards huge and widespread mortgage fraud.

Out of interest, what are the implications on bankruptcy proceedings if it transpires that the bankrupt borrower has obtained credit through such fraud? Presumably it is not looked upon kindly, but could or would criminal proceedings be brought in these circumstances?

EDIT: typo

Edited by aclwalker

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Gulp! Astonishing.

Re estate agents though, I don't think anyone can credibly claim 'mis-selling'. Shurely it doesn't take a university degree (indeed, this may be an impediment) to know that whilst many estate agents (like second hand car salesmen) are loveable enough (one of my relations is one) and would be quite nice folk to down a pint with, on no account should you believe anything they say in a professional context. 'House prices will always go up' is one of those statements you should give no more credence to than 'Only one careful lady owner...'.

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On Sunday I met up with a group of friends I haven’t seen for a while.

The female half of a newly-married couple tells me excitedly that she has some news, and pauses to increase the suspense… They’ve bought their first flat! They decided not to wait any longer and went to the local EA to see what was available, who in turn told them of this “exciting opportunity” which is “guaranteed to increase in value by at least 5% over the next year”.

They took out a self-cert mortgage and since they do not have a deposit, took out an unsecured bank loan of £18000 to cover this. The plan is, in a year’s time, when the value has increased enough for them to be able to take out a new mortgage for a bigger place, they will rent this flat out. They have been told, and really believe that they “can’t lose.”

After a stunned silence instead of the excitable congratulations she seemed to be expecting, came the question “So why haven’t you bought yet?” in a slightly patronising tone.

The HPC-friendly answer was received with a quizzical look, and brushed off as nonsense. “Well you can’t believe everything you hear.” And “The longer you wait, the more money you will lose.”

The Last Fools?

Unsecured bank loan for btl deposit? have heard rumours that certain mortgage brokers were suggesting this sort of behaviour.

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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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